Sierra Club v. Simkins Industries, Inc.

No. HM84-4018 (D. Md. July 31, 1986)

In a Federal Water Pollution Control Act (FWPCA) citizen suit, the court declines to reconsider its earlier holding that defendant is liable for failing to file discharge monitoring reports (DMRs) as required by defendant's national pollutant discharge elimination system (NPDES) permit, holds defendant liable for a $977,000 civil penalty, and awards plaintiff attorneys fees. The court first holds that the citizen suit is proper because the suit was filed after the required 60-day notice period and the state's criminal investigation of defendant does not constitute diligent prosecution in a court within the meaning of FWPCA § 505(b)(1)(A). Although the state had informed plaintiff that it would be initiating an action against defendant, it had not done so when this suit was filed. The court reaffirms its earlier holding that defendant is liable for the violations of its NPDES permit monitoring requirements. In determining the defendant's maximum civil penalty, the court observes that defendant's failure to file quarterly DMRs required by its NPDES permit precludes the court from determining whether defendant violated its quarterly average discharge limitations. Since defendant has not met its burden of proving compliance with the limitations, the court holds that it must find that defendant violated the NPDES permit limitations for the entire three-year period. Following the Fourth Circuit's decision in Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Ltd., 16 ELR 20636, the court finds that that defendant's maximum civil penalty would be $10,000 for each day of the three-year period, or $9,770,000. Concluding that defendant's behavior was not so egregious to warrant the maximum penalty, the court assesses a penalty of $1,000 for each day of violation, or $977,000. Finally, the court finds plaintiff's applications for fees reasonable and holds defendant liable for plaintiff's attorneys and expert witness fees.

[The court's previous decision is published at 15 ELR 21012.]

Counsel for Plaintiff
G. Macy Nelson
Anderson, Coe & King
800 Fidelity Bldg., Baltimore MD 21201
(301) 752-1630

Counsel for Defendant
Jack Harvey, Benjamin Rosenberg
Venable, Baetjer & Howard
1800 Mercantile Bk. & Trust Bldg., 2 Hopkins Plaza, Baltimore MD 21201
(301) 244-7400

[17 ELR 20346]

Murray, J.:

Memorandum

Plaintiff Sierra Club has filed the instant citizen suit against defendant Simkins Industries, Inc. (Simkins) pursuant to § 505 of the Clean Water Act (the Act), 33 U.S.C. § 1365. The complaint alleges that defendant has violated the terms and provisions of its National Pollutant Discharge Elimination System (NPDES) permit number MD0058033. Specifically, the complaint alleges that defendant has violated the Clean Water Act by failing to comply with its NPDES permit; that is, by failing to file quarterly discharge monitoring reports (DMRs) with the State of Maryland between August 1, 1981 and March 31, 1984. By Memorandum and Order dated June 18, 1985, the court granted plaintiff's motion for partial summary judgment on the issue of liability finding that defendant Simkins has violated the Act by failing to comply with the terms of its NPDES permit. At issue before the court, therefore, is the appropriate civil penalty to be assessed against Simkins for its violations. Plaintiff argues that Simkins is subject to a maximum penalty of $9,770,000. Conversely, defendant argues that the court should assess a penalty against it in the range of $10,000 to $20,000.

Both parties have submitted post-trial Proposed Findings of Fact and Conclusions of Law. Defendant also has filed a motion for reconsideration. Having reviewed the record in this case, the court is now prepared to rule.

I. Simkins' Motion for Reconsideration

Defendant Simkins moves the court to reconsider its June 18, 1985 order granting plaintiff's motion for partial summary judgment and denying defendant's motion for entry of judgment on the pleadings. In support of its motion, Simkins argues that the pendency of state criminal proceedings against it requires the court to dismiss plaintiff's suit pursuant to 33 U.S.C. § 1365(b)(1)(B). Simkins also contends that upon receipt of plaintiff's notice of intent to sue, Deputy Attorney General Barrett informed counsel for plaintiff that the Maryland Attorney General's office would be proceeding with a criminal investigation of Simkins. Simkins thus argues that in light of the state criminal proceedings, this private suit is barred and must be dismissed.

Plaintiff Sierra Club opposes defendant's motion for reconsideration. Plaintiff argues that its citizen suit is not barred because the State has not commenced an action against Simkins in a court. Plaintiff also argues that a citizen suit is barred only if the State initiates a court action within the statutory sixty-day notice period. Plaintiff thus argues that defendant's motion for reconsideration [17 ELR 20347] should be denied because the State did not initiate a court action within the sixty-day period.

Section 505(b) of the Clean Water Act, 33 U.S.C. § 1365(b), provides that no citizen suit can be maintained "prior to sixty days after the plaintiff has given notice of the alleged violation . . . or if the Administrator or State has commenced and is diligently prosecuting a civil or criminal action in a court of the United States, or a State to require compliance with the standard, limitation, or order . . ." 33 U.S.C. § 1365(b)(1). Preliminarily, the court finds that the instant citizen suit is proper and should not be dismissed because it was filed after the sixty-day notice period and because the State's criminal investigation is not tantamount to a "diligent prosecution" in a court within the meaning of § 505(b).

The court believes that the state of affairs at the time plaintiff filed this action is dispositive. Significantly, plaintiff initiated this citizen suit on October 31, 1984, sixty-one days after giving notice of its intent to sue. Simkins argues that the State informed counsel for plaintiff within the sixty-day period that it would be proceeding with a criminal investigation of Simkins; nevertheless, Sierra Club improperly filed this suit. The court is not persuaded. At the time plaintiff filed this suit, the State had not commenced a court action within the meaning of § 505(b); to be sure, a state investigation is quite distinct from a court action which is being diligently prosecuted. In order for this case to be barred, the State must have filed a court action within the sixty-day period and then diligently have prosecuted the case. See Brewer v. City of Bristol, 577 F. Supp. 519 (E.D. Tenn. 1983) ("Timing of pollution abatement efforts is often of critical importance; [r]equiring that the state action be commenced within the 60-day notice period is a strong method of insuring prompt response.") The court believes that to hold otherwise would permit "state agencies and polluters [to] ignore the time requirements of Section 1365(b) by "diligently" prosecuting late actions and thus bar any further citizen participation." Brewer, 577 F. Supp. at 528.

The court notes that counsel for defendant states, by affidavit, that he met with Deputy Attorney General Jane Barrett on July 10, 1985 and was informed that "[Ms. Barrett's] investigation had progressed to the point that she was intending to seek a criminal indictment of Simkins Industries." Affidavit of Jack Meyerson, p. 1 (emphasis added). Moreover, Maryland Assistant Attorney General Michael Powell states, by affidavit dated July 1985, that "between August 1984 and the present, the Hazardous Waste Strike Force has proceeded with the Simkins matter and it is anticipated that an indictment will be presented to a state grand jury in late August or early September of 1985." Affidavit of Michael Powell, p. 2. Obviously, any state action was commenced after plaintiff filed this case on October 31, 1984. Having found that the State had not commenced a court or an administrative action within the meaning of § 505(b) of the Clean Water Act prior to the commencement of this action, defendant's motion for reconsideration will be denied.

II. Civil Penalties

Having denied defendant's motion for reconsideration, the court's June 18, 1985 order granting plaintiff's motion for partial summary judgment on the issue of liability is hereby reaffirmed. Again, the court finds that defendant's violation of its NPDES permit conditions is a violation of the Clean Water Act for which defendant may be held liable. Sierra Club v. Simkins Industries, Inc. et al., Civil No. HM 84-4018 (D. Md. June 18, 1985). The court now must decide the amount of civil penalties for which defendant Simkins is liable. Before analyzing the law applicable to this issue, the court will first examine the facts giving rise to the instant action.

A. Findings of Fact

Plaintiff Sierra Club and defendant Simkins have filed Proposed Findings of Fact and Conclusions of Law in this case. The court has determined to adopt in part plaintiff's and defendant's Proposed Findings of Fact, having found that they adequately and fairly represent the facts in this case. The court's factual findings thus are set forth below incorporating the parties' submissions.

A. Background

1. Plaintiff, Sierra Club, is a non-profit national conservationist organization with many members in the Chesapeake Bay area, dedicated to protecting natural resources, including water.

2. Members of the Sierra Club reside in Maryland, in the vicinity of the Patapsco River, and recreate in, on or near, and otherwise use and enjoy the Patapsco River and the water system of which it is a part. The quality of the nation's waters and the waters of the State of Maryland directly affects the health, recreational, aesthetic, environmental interests of Sierra Club's members. The interests of the members of the Sierra Club have been, are being and will be adversely affected by the failure of Defendant, Simkins Industries, Inc. to comply with its NPDES permit requirements.

3. Simkins Industries, Inc. operates a paper mill on River Road, Catonsville, Maryland 21228. (Discharge permit; Frey testimony).

4. The facility was formerly a textile plant. (Frey testimony).

5. The plant in Catonsville is one of 15 plants owned by Simkins Industries, Inc. which are mostly located over the Eastern seaboard. (Plaintiff's Exhibit 11 — Defendant's 1984 Annual Report).

6. The Simkins plant manufactures paperboard from waste paper, the bulk of which is collected in the local area. (Freytestimony).

7. The Defendant processes 160 tons of waste paper per day. (Frey testimony).

8. The Defendant produces 3600 tons of paper products a month. (Frey testimony).

9. The Defendant spends approximately $500,000 to $600,000 a year on maintenance at the Baltimore plant. (Frey testimony).

10. The Baltimore plant of Simkins Industries, Inc. draws one million gallons per day from the Patapsco River. (Baisch testimony).

11. The Baltimore plant of Simkins Industries, Inc. discharges approximately 500,000 gallons per day of waste water into the sewer. (Frey testimony).

B. NPDES Permit

12. The State issued NPDES permit number MD0058033 to Simkins Industries, Inc.

13. The effective date of the NPDES permit was July 27, 1981. (Defendant's Exhibit 6).

14. The NPDES permit has the following monitoring requirements:

a. Out fall 001 — The quarterly average of oil and grease may not exceed 20mg/1 per liter. The daily maximum discharge of oil and grease may not exceed 30 mg/1 per liter. Simkins must monitor once a month conducting 3 grabs in 45 minutes. There should be no discharge of floating solids or persistent foam in other than trace amounts. (Persistent foam is foam that does not dissipate within one half hour of point of discharge.)

b. Out fall 002 — There should be no discharge of processed waste. The pH shall not be less than 6.0 or greater than 9.0 and shall be monitored by grab once per month. There should be no discharge of solids or persistent foam in other than trace amounts. Starting on the effective date of the permit and every year thereafter, the following shall be monitored at out fall 002 and at a point upstream from the factory:

1. Copper

2. TOC [total organic carbons]

3. Total phenol

c. Out fall 003 — The pH shall not be less than 6.0 or greater than 9.0 and shall be monitored by grab once a month. There should be no discharge of floating solids or persistent foam in other than trace amounts. (Defendant's Exhibit 6.)

15. The permit requires Simkins to monitor 3 outflows from its power house and paper producing plant on a monthly basis and to report the results of this monitoring to the Maryland Department of Health and Mental Hygiene, Enforcement Division on a quarterly basis. (Defendant's Exhibit 6). Thus commencing August 1, 1981 through March 31, 1984 Simkins should have filed 11 Discharge Monitoring Reports.

16. Simkins has failed to file quarterly discharge monitoring reports with the State of Maryland between August 1, 1981 and March 31, 1984, the time period for which relief is sought in the complaint. In fact, however, Simkins did not file a DMR with the state until October 1, 1984. (Stipulation of counsel).

C. Recalcitrance

17. On February 8, 1983, a state employee filed a report of observations concerning Simkins Industries, Inc. He remarked: [17 ELR 20348] "Contacted Mr. Gamber, new plant manager, and reviewed discharge permit requirements, particularly quarterly monitoring reports. Mr. Gamber stated that out fall 002 receives non-contact cooling water from several sources. . . ." (Plaintiff's Exhibit 18).

18. On February 9, 1983, A. D. Gamber, plant engineer for Simkins Industries, Inc. wrote Paul Thompson, Acting Regional Chief Enforcement Program, Waste Management Administration, State of Maryland and stated: "As reviewed with Mr. Miller we will obtain monthly outfall samples and have them tested as a basis for the quarterly discharge reports." (Plaintiff's Exhibit 15).

19. On May 25, 1983, a state employee, Don Miller, filled out a report of observations concerning Simkins Industries, Inc. He stated: "I contacted Mr. Gamber, plant engineer, for routine inspection. Mr. Gamber stated that he had been contacted by Mike Broumberg concerning past due DMR's. Mr. Gamber stated that he was at fault for not sampling and submitting DMR's. He further indicated that he would start sampling per permit requirements. Mr. Gamber stated that they had had an oil spill recently and consequently had made some changes at the fuel oil storage tanks." (Plaintiff's Exhibit 17).

20. On July 12, 1983, a state employee, Don Miller, filled out a report of observations concerning Simkins Industries, Inc. He stated: "Contacted Mr. Gamber, plant manager. Mr. Gamber stated that he had not implemented a sampling program per DP requirements. He stated that his supervisors did not consider the sampling a priority and requested a meeting with his supervisor." (Plaintiff's Exhibit 19).

21. On September 8, 1983, a state employee, Arthur O'Connell and Mike Griffen filed a report of observations concerning Simkins Industries, Inc. and asserted, among other things: "However, Mr. Gamber told us that no arrangements have been undertaken to sample the out falls as required in the discharge permit." (Plaintiff's Exhibit 23).

22. On July 27, 1983, Paul Thompson, state inspector, issued a site complaint to Simkins Industries, Inc. and asserted: "That the reports and records required by discharge permit no. 80-DB-1779 have not been submitted to the administration. The existence of the above-mentioned violation may subject you to prosecution and penalty. Accordingly, you are advised that the following corrective actions are necessary to remedy the violation(s). By August 16, 1983, submit to the administration a written report detailing the reasons for non-submittal, request for permit modifications, detail correctional plan and a plan for monitoring record keeping and reporting." (Plaintiff's Exhibit 20).

23. On September 21, 1983, a state inspector, Michael D. Griffen issued a site complaint to A. D. Gamber, plant engineer of Simkins Industries, Inc. Griffen asserted: "No discharge monitoring reports are filed as of this date." (Plaintiff's Exhibit 24).

24. Between August 1, 1981 and October 1, 1984, the senior person at the Simkins plant who was ultimately responsible for the filing of these discharge monitoring reports changed nine times. (Frey testimony).

25. On August 29, 1984, the acting plant manager Jim Grant instructed Robert Frey, controller, to see that all applicable state and federal monitoring and reporting requirements were complied with. (Frey testimony and Defendant's Exhibit 1).

26. Two days thereafter, on August 31, 1984, the Sierra Club mailed a 60 day notice pursuant to 33 U.S.C. § 1365(a)(1)(A) to defendant to the effect that Simkins failed to file discharge monitoring reports from August 1981 through March 31, 1984. The letter was mailed to Leon Simkins, President, Simkins Industries, Inc., P.O. Box 3249, Baltimore, Maryland 21228.

27. The NPDES permit requires that the defendant conduct monthly tests and file a discharge monitoring report (DMR) with the State on a quarterly basis. (See pp. 2,3,4,7 of the permit).

28. The defendant did not conduct monthly tests until September 30, 1984. (See DMRs).

29. The defendant did not file a DMR with the state until October 1, 1984. (Stipulation of counsel).

30. Simkins Industries, Inc. hired Penniman and Browne, Inc. on September 4, 1984. (Defendant's Exhibit 3). Simkins retained a licensed chemist from Penniman and Browne to perform the required monitoring and to prepare the necessary reports to insure compliance with the Simkins NPDES permit.

31. Commencing with the report due in October 1984 and continuing through the present Simkins has filed quarterly discharge monitoring reports as required by its permit. (Frey testimony and Defendant's Exhibit 4).

32. In addition to the preparation of and filing of discharge monitoring reports, between August 1984 and the present, Simkins has spent in excess of $34,000 in implementing a clean water program. (Frey testimony and Defendant's Exhibit 5).

D. Plaintiff's Expert Testimony: David A. Wright, Ph.D

33. David A. Wright, Ph.D., testified for Sierra Club. He has been Assistant Professor, University of Maryland, Center for Environmental and Estuarine Studies, Chesapeake Biological Laboratory, Solomons, Maryland, 20688 since 1979. His area of professional expertise is comparative physiology; effects of inorganic pollutants on marine and estuarine organisms; toxicology. He has authored numerous publications and has presented numerous papers. (See Plaintiff's Exhibit 1 — Curriculum Vitae of Dr. Wright).

34. The court accepted David A. Wright as an expert in the fields of toxicology, physiology, with concentration in aquatic environment.

35. David A. Wright expressed the opinion that an environmental survey is necessary because Simkins Industries, Inc. did not file any DMR's with the State between July 27, 1981 and October 1, 1984. The river sediment survey is needed, in his opinion, because no one knows what the defendant discharged into the river. Should the survey reveal substantial pollution, it will be necessary to clean it up. Pending the survey finding, Dr. Wright could not estimate the cost of clean up, if needed.

36. David A. Wright, Ph.D. recommended ten sampling sites upstream, downstream, at the intake point and at the outtake overflow. He also suggested additional analyses of the sediment for metal, lead, mercury, arsenic and other metals.

37. Dr. Wright recommended a large scale survey to determine what, if any, pollution was in the sediment. Wright suggested a survey of materials in addition to the materials which are identified in the discharge permit. An analysis of this type would allow one to analyze the sediment and look for persistent pollution in the vicinity of the plant. His opinion on the need for a survey is not affected by the fact that the defendant started filing DMR's on October 1, 1984.

38. The survey of the river sediment would cost approximately $52,000. (Plaintiff's Exhibit 10).

39. If the survey is limited to the materials which were identified in the discharge permit, it would cost approximately $26,000.

F. Financial Status and Financial Savings of Simkins

40. During the years in question, fiscal 1981 through fiscal 1984, the Simkins Baltimore plant has consistently operated at a loss of between $400,000 and $500,000 annually. (Frey and Baisch testimony).

41. Net sale and operating revenues for Simkins, Inc. and its subsidiaries for 1984 were $133,335,685. Gross profit for 1984 was $18,401,854. Net income for 1984 was $8,000,567. (Plaintiff's Exhibit 11 — Simkins 1984 Annual Report).

42. Penniman and Browne, Inc. charged Simkins Industries, Inc. $5,030.50 to do the analysis and file discharge monitoring reports with the State between December 1, 1984 and June 1, 1985.

43. After the Sierra Club filed its 60-day letter on August 31, 1984, Simkins spent $34,641.54 (See Defendant's Exhibit 5), in order to come into compliance with State requirements. (Frey testimony).

44. Had the defendant made these improvements on or before July 27, 1981 when its permit became effective, the defendant would have lost the use of $34,641.54 for thirty seven months (approximately $3,400.00 a year on this income for three years). (Frey testimony).

G. Plaintiff's Expenses and Counsel Fees

45. David A. Wright, Ph.D. has submitted a bill for $2,187.00.

46. Bruce A. Bell, Ph.D., P.E., has submitted a bill for the Simkins case in the amount of $379.91.

47. Plaintiff has submitted a bill for the Simkins case exclusively in the amount of $19,336.65. Plaintiff also has submitted a bill in the amount of $10,122.36 for "Sierra Club General," a portion of which is attributable to the Simkins case.

B. Maximum Civil Penalty Liability

Section 309(d) of the Clean Water Act, 33 U.S.C. § 1319(d), provides that "any person who violates . . . any permit condition or limitation . . . shall be subject to a civil penalty not to exceed [17 ELR 20349] $10,000 per day of such violation." Defendant Simkins' maximum liability in this case thus turns on the number of days during which it violated its permit limitation.

Defendant Simkins stipulates that its NPDES permit provides that the quarterly average of oil and grease may not exceed 20 mg/l per liter at outfall 001. See Plaintiff's Proposed Findings of Fact and Conclusions of Law, paragraph 15a (underlining by Simkins in blue indicates that Simkins agrees with the statement made). See also Defendant's Exhibit 6. Simkins, however, failed to file any DMRs between July 27, 1981 and March 31, 1984 indicating the quarterly averages for oil and grease at outfall 001. Simkins' failure to file quarterly average reports leaves the court without any guidance regarding whether Simkins violated its "quarterly average" permit limitation for oil and grease. Significantly, the United States Court of Appeals for the Fourth Circuit has recently stated that "by requiring permit holders to monitor their discharges and report them through DMRs, . . . the Act itself places on the permit-holder a burden of showing compliance with the permit's limitation. Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Civil No. 85-1873, p. 28 [16 ELR 20636] (4th Cir. May 22, 1986). Here, Simkins simply has failed to sustain its burden; it has offered no proof showing its compliance with the permit's quarterly average limitation during the three years it failed to report. Absent proof to the contrary, the court therefore must conclude that Simkins violated its "quarterly average" permit limitation from July 27, 1981 to March 31, 1984.

Having found that Simkins has violated its quarterly average permit limitation, the court must now ascertain the maximum civil penalty for violation of a quarterly average permit limitation by determining the number of days involved in such a violation. The fourth circuit held in Chesapeake that "for the purpose of fixing an 'appropriate' civil penalty which, pursuant to 33 U.S.C. § 1319(d), may be fixed at a maximum of $10,000 per day of violation, violations of 'average' limitations encompassing periods of greater than one day are to be treated as a violation for each day of the time period involved." Chesapeake, supra, at 23-24, 31. In this case, Simkins violated its quarterly average permit limitation for oil and gas for 11 quarters — from July 27, 1981 to March 31, 1984. There are 977 days in those 11 quarters; therefore, Simkins violated its permit limitation for 977 days. The maximum penalty to which Simkins is subject for those days of violation is $9,770,000 ($10,000 X 977 violations). That Simkins is subject to $9,770,000 in civil penalties for violating a quarterly limitation does not mean that the entire amount of civil penalties must be assessed against Simkins. To be sure, "the [$9,770,000] is a maximum penalty under the statute, not a mandatory one." Chesapeake Bay Foundation v. Gwaltney of Smithfield, 611 F. Supp. 1542, 1553 [15 ELR 20663] (E.D. Va. 1985).

C. Amount of Civil Penalty

The court now must determine the actual amount of the civil penalty to assess against Simkins in light of the statutory maximum. In making this determination, the court has considered the gravity of the violation, the financial status of the defendant, the possible deterrent effect of this assessment, and the past and present actions of the defendant. Having concluded that defendant's conduct was negligent and should be penalized but not so egregious as to warrant the full assessment of $10,000 per day for each violation, the court has determined that defendant should pay $1,000 for each of its permit violations. In short, the court has determined to assess a civil penalty in the amount of $977,000 against defendant herein ($1,000 X 977 violations). The court believes that this assessment will serve as a sufficient deterrent, will adequately compensate for defendant's past actions, and will protect the interests of all the parties. No further adjustments to this award, either upward or downward, are warranted.

III. Plaintiff's Application for Counsel and Expert Witness Fees

Plaintiff Sierra Club has filed an application for counsel and expert witness fees. Defendant Simkins has only challenged an entry for March 22, 1985 seeking compensation for 2.3 hours of "research and preparation for seminar" by plaintiff's investigators. This entry has been withdrawn by plaintiff. Simkins also questions whether the time indicated in other entries is excessive.

The court has reviewed the applications for fees and finds them reasonable in terms of time spent and compensation sought. The court therefore will grant plaintiff's application for fees and expenses in the amount of $19,336.65 relating to Sierra Club v. Simkins exclusively. The court also will grant plaintiff's application for fees relating to Sierra Club, General, one-third of which is to be paid by Simkins. Finally, the court will grant plaintiff's application for experts' fees in the amount of $2,187.00 as to David A. Wright, Ph.D. and $379.91 as to Bruce A. Bell, Ph.D., P.E.

The court will enter a separate order incorporating the above rulings.

Order

For the reasons outlined in the foregoing memorandum, it is this 31st day of July 1986, by the United States District Court for the District of Maryland,

ORDERED:

(1) that defendant's motion for reconsideration be, and the same hereby is, Denied;

(2) that defendant Simkins shall be assessed a civil penalty of $977,000.00 for its permit violations;

(3) that plaintiff Sierra Club be, and hereby is, awarded expert fees, counsel fees and litigation expenses; and

(4) that the Clerk of the Court shall mail copies of this memorandum and order to counsel for the parties.