Sierra Club v. Nueva Engineering, Inc.

No. HM-84-4019 (D. Md. July 11, 1989)

The court holds that it has jurisdiction over a Federal Water Pollution Control Act (FWPCA) citizen suit filed against a manufacturing plant, which closed down before the suit was filed, since the defendant continues to violate the recordkeeping requirements of its National Pollutant Discharge Elimination System (NPDES) permit. The court holds that due to the pendency of the Supreme Court's Gwaltney II decision during this case, and subsequent interpretation on remand by the Fourth Circuit, which held that citizen-plaintiffs must prove continuing violations to recover damages, the court must reconsider its prior ruling on liability. The NPDES permit — which was automatically extended during the course of litigation — required the manufacturing plant to maintain its records regarding its discharges for three years. The court finds that the manufacturing plant did not file required reports, and to this day continues to violate its NPDES permit. The court holds that the number of days of violation should begin with the date on which a report was due under the permit, or 575 days. The court holds that the defendant's discharges were consistently in excess of its NPDES permit limits and awards $ 500 per day of violation, or $ 287,500.

Counsel for Plaintiff
G. Macy Nelson
Anderson, Coe & King
Ste. 2000, 201 N. Charles St., Baltimore MD 21201
(301) 752-1630

Counsel for Defendant
Ralph K. Rothwell Jr.
Maslan, Maslan & Rothwell
7508 Eastern Ave., Baltimore MD 21224
(301) 282-2700

[20 ELR 20006]

Murray, J:

Memorandum

Plaintiff Sierra Club initiated this action against defendant Nueva Engineering, Inc. ("Nueva") alleging violations of the Clean Water Act ("the Act"), 33 U.S.C. § 1251 et seq. Specifically, Sierra Club alleges that Nueva failed to comply with several of the conditions established by its National Pollutant Discharge Elimination System ("NPDES") Permit ("the Permit").

The Court earlier entered partial summary judgment against defendant on the issue of liability. Sierra Club v. Nueva Engineering, 617 F. Supp. 1120 (D. Md. 1985). Subsequently, Nueva filed a suggestion of bankruptcy staying all litigation.¹ In accordance with an Order entered by the United States Bankruptsy Judge, the Court conducted a two-day trial commencing on May 18, 1987 on the issue of damages alone. The Court heard closing arguments on June 5, 1987. The parties then each submitted proposed findings of fact and conclusions of law.² Each party color-coded its adversary's proposed findings and conclusions to indicate its agreement or disagreement.

The Court then awaited the decisions of the Supreme Court in Gwaltney of Smithfield v. Chesapeake Bay Foundation, U.S. , 108 S. Ct. 376, 98 L. Ed. 2d 306 [18 ELR 20142] (1987) ("Gwaltney I"), of the Court of Appeals for the Fourth Circuit in that case on remand, Chesapeake Bay Foundation v. Gwaltney of Smithfield, 844 F.2d 170 [18 ELR 20941] (4th Cir. 1988) ("Gwaltney II"), and of the Court of Appeals in the companion case of Sierra Club v. Simkins Industries, Inc., 847 F.2d 1109 [18 ELR 21053] (4th Cir. 1988), and the Supreme Court's determination on the petition for writ of certiorari in that case Simkins Industries, Inc. v. Sierra Club, cert. denied, 57 U.S.L.W. 3826 (June 19, 1988). The parties submitted supplemental memoranda regarding the impact of these decisions on the instant case.³ The Court has reviewed the evidence, the proposed findings of fact and conclusion of law, the new case law, and the parties' supplemental memoranda, and is now prepared to rule.

I. The Clean Water Act

The Act prohibits the discharge of pollutants into navigable waters except as authorized by certain sections of the Act. § 1311(a). The major exception in the Act allows discharge of pollutants in accordance with the terms of an NPDES permit. § 1342. Either the federal Environmental Protection Agency ("EPA"), or a state with a permit program approved by the EPA, may issue a permit to an entity ("point source") wishing to discharge pollutants into the waterways. § 1342(a), (b).

In addition to setting the maximum allowable levels of discharged pollutants, a permit may require that a point source monitor its discharge, installing new equipment for sampling if necessary, and maintain records of its findings. § 1318.

[20 ELR 20007]

Should a point source fail to obtain a permit or fail to comply with a permit's conditions, either the EPA or the state may take administrative, civil or criminal action. §§ 1319, 1342. If neither government takes action, private citizens may seek injunctive relief and civil penalties from a point source alleged to be in violation of "an effluent standard or limitation." § 1365(a)(1). An effluent standard or limitation is defined to include "a permit or condition thereof issued under section 1342." § 1365(f)(6).

II. Findings of Fact⁴

A. Nueva's Manufacturing Process

(1) Nueva operated, as its only business, a plant for manufacturing printed circuit boards at 3500 Washington Boulevard, Baltimore, Maryland from late 1979 until the first week of August, 1984. Defendant's Proposed Finding of Fact No. 2, underlined in blue by plaintiff, indicating agreement.

(2) The Circuit boards printed by Nueva are used in various types of electrical equipment such as stereos and televisions. Nueva's manufacturing process involved the coating of an entire board with copper plating, putting tin-lead on the board in the configuration of the electrical circuit, chemical etching off of the copper not protected by the tin-lead, and the removal of the tin-lead which leaves a copper circuit through which the electricity flows. During this process the board passed through a series of tanks, in which elements were either added to the board, etched off chemically, or rinsed. Plaintiff's Proposed Finding of Fact No. 7, underlined in yellow, indicating defendants' agreement but belief in the irrelevance of the information.

(3) The waste from some of these tanks flowed into a pipe surrounding the plant. This pipe discharged this untreated waste directly into an unnamed tributary of the Patapsco River. The waste from other tanks was collected and stored in disposal drums for later transportation to a waste disposal site. Defendant's Proposed Findings of Fact Nos. 8 and 9, underlined in red by plaintiff, indicating its disagreement.

(4) During the time frame of the instant suit, Nueva discharge effluent in the estimated average amount of 5,000 to 10,000 gallons per day, with an estimated occasional 20,000 gallons a day. Defendant's Proposed Finding of Fact No. 10, underlined in blue; Plaintiff's Proposed Finding of Fact no. 15, underlined in blue.

(5) Included in the waste water discharged into the river were concentrations of copper, lead, nickel, palladium and other suspended solids. Plaintiff's Exhibit Nos. 1 and 6-20.

(6) Nueva ceased its operations at the Washington Boulevard plant on August 13, 1984. Defendant's Proposed Finding of Fact No. 13, underlined in blue.

B. Nueva's Compliance with the Act

(1) Between 1979 and 1981, Nueva operated its Washington Boulevard plant without applying for an NPDES permit. After investigation by the Bureau of Environmental Services of the Baltimore County Department of Health and by the State of Maryland, and a warning notice issued by the latter, Nueva applied for and received NPDES Permit Number MD0058874. Plaintiff's Exhibit Nos. 1, 29, 30, 31 and 33; Defendant's Proposed Finding of Fact No. 6, underlined in blue; Plaintiff's Proposed Finding of Fact No. 16, underlined in blue.

(2) The Permit, issued August 10, 1982, in effect until August 10, 1987, set limits for the concentrations of the four elements and for total suspended solids ("TSS"). The Permit also required Nueva to file monthly Discharge Monitoring Reports ("DMRs"), on which Nueva reported its measurement of the actual level discharged. In addition, Nueva had to monitor the flow, or number of gallons discharged, per day. Plaintiff's Exhibit No. 1.

(3) The Permit also mandated that Nueva maintain its records regarding its discharges for a period of three years, this period to be "automatically extended during the course of litigation . . ." Plaintiff's Exhibit No. 1 at Paragraph II(A)(7).

(4) Nueva measured its discharge and filed DMRs from October of 1982 through March of 1984. During that time, Nueva's discharge of copper violated the effluent limitation in fifteen months out of eighteen. Its lead and TSS discharges were over the limit nine months each, and the nickel discharge surpassed the Permit limitation in six months. Nueva's DMRs reveal that no violations of the palladium level occurred. If Nueva measured the flow, they made no record of such measurements. Plaintiff's Exhibit Nos. 6-20.

(5) Nueva filed no DMRs between April of 1984 and when it ceased operating in August of 1984. Plaintiff's Exhibit Nos. 6-20; Plaintiff's Proposed Finding of Fact No. 19, relevant part underlined in red.⁵

(6) On August 31, 1984, Sierra Club sent Nueva a sixty-day warning letter, required by § 1365(b), listing the violations it believed that Nueva had committed up to this point. On October 31, 1984, Sierra Club filed the instant lawsuit. Plaintiff's Complaint, Paper No. 1.

III. Conclusions of Law

A. Liability

Earlier in this litigation, the Court entered partial summary judgment in favor of plaintiff on the issue of liability. Sierra Club, supra, 617 F. Supp. 1120. At that time, the law in the Fourth Circuit was that a nongovernmental citizen-plaintiff could receive damages even for violations that had completely ceased. Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, 791 F.2d 304, 308 n.9 [16 ELR 20636] (4th Cir. 1986). The Supreme Court reversed this ruling, holding that citizen suits could only be maintained when the plaintiffs had alleged violations continuing at the time of the filing of the complaint. Gwaltney II, supra, 108 S. Ct. at 386. In its opinion on remand, the Court of Appeals made clear that citizen-plaintiffs must not only sufficiently allege continuing violations to merit jurisdiction but must also prove continuing violations to recover damages. Gwaltney II, 844 F.2d at 171 n.1 (4th Cir. 1988). The Court must therefore reconsider its ruling on liability and must first determine whether Sierra Club has proved violations continuing at the time it filed its lawsuit to permit it to recover damages.⁶

Nueva argues that, because it had ceased operations at its plant by the time Sierra Club mailed its sixty-day warning letter, Sierra Club could not possibly prove continuing violations of the NPDES permit. While Nueva's position is certainly meritorious with respect to discharging chemicals into the tributary, it does not take into account Nueva's violation of general permit condition contained at Paragraph II(A)(7), which required that records be kept for three years, longer if litigation is pending. The Act defines an "effluent standard or limitation" to include "a permit or condition thereof issued under section 1342 of this title." § 1365(f)(6). A violation of a permit condition is therefore a violation of an effluent standard or limitation. As Nueva did not file DMRs after March 31, 1984, it cannot satisfy the records retention requirement. To this day it is in continuing violation of Permit condition II(A)(7). Sierra Club not only has proved jurisdiction, but has prevailed on the merits. The Court reaffirms its earlier ruling on liability, and will address damages below.

The Court notes that the Court of Appeals has recently made clear the importance of reporting requirements in the companion case brought by Sierra Club simultaneously with this case. In that case, Simkins had failed at all times to conduct sampling or file DMRs up to one month before Sierra Club filed suit. The Court stated:

It is true that Simkins' failure to sample occurred solely [20 ELR 20008] before Sierra Club filed suit, but Simkins' monitoring obligations were not designed to be a mere academic exercise. Simkins was bound by the reporting and records retention requirements of the NPDES permit that are central to adequate administration and enforcement of limits on substantive discharges under the Clean Water Act.

Simkins, supra, 847 F.2d at 1115.

B. Damages

Plaintiff and defendant are in agreement that the Court could award $ 10,000 per day of violation. They disagree on the number of days. Sierra Club argues that the Court should impose penalties from August 10, 1982, the effective date of the permit, until March 31, 1984, the last day mentioned in its complaint. The total of 598 days multiplied by $ 10,000 would lead to a potential liability for Nueva of $ 5,980,000.00. Nueva argues that the Court should assess penalties only from September 1, 1982, the first day on which a DMR was due under the new permit. For the 575 days urged by Nueva, the maximum award would be $ 5,750,000.00. As the Court declines to award an amount approaching the maximum penalty, the Court exercises its discretion to accept the limit suggested by Nueva. The Court will award damages for 575 days of violations by Nueva.

The Court does this principally because the Court used the same limit in its companion case of Simkins. The Court looks also to its decision in the Simkins case to offer it guidance in determining the amount of damages it will award.

The defendant in Simkins filed no DMRs until after receiving the sixty-day warning letter from Sierra Club. Its flow was over 50,000 gallons a day. In the instant case, Nueva, after some urging, obtained an NPDES permit, and filed all DRMs required until March 31, 1984. Its flow has been estimated to be at the most, 10,000 gallons per day. In these factors, the Court determines that Nueva was a far less serious offender than Simkins. In Simkins, the Court awarded Sierra Club $ 1,000 for each day of violation, for an award totaling $ 977,000.

However, Nueva's DMRs reveal that there was not one month within which Nueva met all of its permit limitations. Thoughout its operation, Nueva discharged wastewater, without treatment of any kind, directly into the tributary of the Patapsco River. Both of Sierra Club's experts testified that the elements discharged by Nueva would, individually and more so in combination, have deleterious effects on aquatic life. The Court finds that more than nominal damages are mandated to permit surveys of the tributary and surrounding waterways and to serve as a deterrent to Nueva itself in any future operations and to other manufacturers similarly situated. Accordingly, the Court determines that it will award $ 500 per violation per day. Multipled by 575, this figure leads to a final award of $ 287,500. Accordingly, the Court will enter judgment in this amount in a separate Order.

1. Paper No. 16. The paper number is the docket entry number in the official Court file.

2. Plaintiff's Proposed Findings of Fact and Conclusions of Law, Paper No. 25; Plaintiff's Response to Defendant's Proposed Findings of Fact and Conclusions of Law (containing defendant's submission in its entirety), Paper No. 26.

3. Paper Nos. 28, 29 and 31.

4. Sierra Club, in addition to color underlining Nueva's proposed findings of fact and conclusions of law, added unsolicited commentary after paragraphs with which it disagreed. Paper No. 26. Nueva objected at closing argument, and filed a reply to Sierra Club's commentary. Paper No. 24. As the Court did not request Sierra Club's additional information, the Court disregarded it and, therefore found no need to consider Nueva's reply. Other than these additions to what the Court requested, the Court finds that the parties' proposed findings of fact fairly and accurately describe the events. The Court will adopt in part the proposed findings of fact of plaintiff, and in part those of defendant.

5. Nueva underlined this portion of Plaintiff's Proposed Finding of Fact in red, but at trial produced no evidence that it had filed DMRs for this period. The Court notes that the complaint only requested relief for the period up to March 31, 1984, so that Nueva might not have felt compelled to produce such later DMRs as existed. As will be seen below, the Court's decision rests on this failure to file DMRs. Should the Court receive from Nueva, within thirty days from the date of this Memorandum, proof that it did file DMRs and that it retains its records, the Court will reconsider its ruling.

6. In Sierra Club's Supplemental Memorandum, Paper No. 29, Sierra Club argues that the Supreme Court's Gwaltney decision requires solely that a citizen-plaintiff establish jurisdiction with good-faith allegations of a continuing violation to entitle that plaintiff to recover. However, the Court of Appeals rejected that interpretation in its Gwaltney opinion on remand. The Court of Appeals ruled that "a citizen-plaintiff prove the existence of an ongoing violation (continuous or intermittent) in order to prevail. [Gwaltney I] 108 S. Ct. 386." Gwaltney II, 844 F.2d at 171 n.1 (4th Cir. 1988) (emphasis added).