United States v. City of San Diego

No. 88-1101-B (IEG) (S.D. Cal. March 28, 1991)

The court holds that San Diego has been in almost continuous violation of the Federal Water Pollution Control Act (FWPCA) since that law was enacted in 1972, and imposes a civil penalty of $ 3 million against the City. The court first refuses to defer consideration of the proposed consent decree to allow the City to apply for an FWPCA § 301(h) waiver. The court holds that the City and an intervenor have failed to prove by a preponderance of the evidence that the outfall from the waste treatment plant is not damaging the water quality and attendant kelp beds. Further, evidence shows elevated levels of disease-carrying bacteria drifting toward the shore from the outfall, which create a health risk to scuba divers and recreational water users.

The court next imposes a $ 3 million civil penalty against the City, pursuant to FWPCA § 309(d), even though the maximum statutory FWPCA penalty for the violations exceeds $ 229 million and the plaintiffs requested a $ 10 million penalty. The court finds that the City has commited violations of substantial seriousness and that the City benefitted by $ 300 million over the period of violations from foregoing capital improvements. The evidence shows that the violations resulted from three deficiencies in the City's sewage treatment efforts, including insufficient control of pretreatment of sewage by industrial users, frequent sewage spills in the collection system, and the absence of secondary treatment at a City wastewater treatment plant. However, the court also finds that the City's failure to comply with federal and state regulatory mandates is at least partially mitigated by the conflicting regulatory messages sent to the City by the Environmental Protection Agency and California.

In using its equitable discretion, the court balances the policy goals of retribution and deterrence against the need to provide incentives to the City to engage in prudent planning for the future. Of the $ 3 million civil penalty, $ 500,000 is payable to the United States Treasury on entry of judgment, and the remaining $ 2.5 million is payable to the Treasury on January 1, 1992, unless the City, at its option, enacts the court's suggested credit project. Pursuant to FWPCA §§ 251(b) and 309(d), the court finds that it is permitted to consider permanent water conservation projects as a form of penalty. Under the court's order, the optional project must be enacted on or before January 1, 1992, and include requirements for the installation of water efficient toilets, shower heads, and faucets in all new construction and remodeling of bathrooms. In addition, sellers of property must retrofit all bathrooms and kitchens with such devices before selling, and the City must offer rebates to residences that voluntarily retrofit with such devices. Upon funding by the City of this program for five years, the penalty ordered will be considered satisfied.

Counsel for Plaintiffs
Gerald F. George, Karen S. Dworkin
Environmental Enforcement Section, U.S. Department of Justice
P.O. Box 7611, Ben Franklin Station, Washington DC 20044
(202) 514-2000

David Eissler, Deputy Attorney General
3580 Wilshire Blvd., Los Angeles CA 90010
(213) 736-2304

Counsel for Defendant
Ted Bromfield
Office of the City Attorney
202 C St., Third Fl., San Diego CA 92101
(619) 236-6220

[21 ELR 21224]

Brewster, J.:

Memorandum Decision

Since February 5, 1991, this court has heard evidence concerning the penalties which should be imposed against defendant City of San Diego (City) for its failure to comply with the relevant provisions of the Clean Water Act. Simultaneously, in an effort to determine whether consideration of the proposed consent decree should be deferred so that the City may pursue a § 301(h) waiver, the court has received environmental impact evidence concerning the Point Loma outfall. Such evidence is also relevant to any consideration of penalties. Upon consideration of all of the evidence presented by the parties, the court hereby enters the following Memorandum Decision, which is not exhaustive of the facts or the conclusions of law to be filed hereafter.

I. Deferral of Consideration of the Consent Decree

A. Standard

As previously ordered by the court, the burden is on the City and Intervenor Henderson to prove by a preponderance of the evidence that the Point Loma discharge is not significantly injurious to the marine environment. If the court finds that the City and Intervenor Henderson have met this burden, then consideration of the proposed consent decree will be deferred until such time as the City completes its pursuit of a § 301(h) waiver. If obtained, this waiver could exempt the City from compliance with the secondary treatment requirements of the Clean Water Act at the Point Loma plant.

B. Summary of the Relevant Evidence

The parties have focused on three indicia of environmental impact with respect to the Point Loma discharge: (1) the balanced indigenous population (BIP) surrounding the outfall; (2) the impact of the outfall on the Point Loma kelp beds; and (3) the level of disease-carrying pathogens in the effluent which encroach on recreational areas in the kelp beds.

In considering the first factor, the court finds that the evidence establishes an alteration of the BIP in an area surrounding the outfall of approximately 1.75 miles. Using the Infaunal Trophic Index (ITI),¹ scientific testimony demonstrates that the BIP has been reduced to approximately sixty-nine in the relevant outfall area, while an analysis of nearby comparable marine regions unaffected by the outfall indicates that the ITI level should be approximately eighty-nine. For a number of reasons, including the fact that prior EPA guideline statements established sixty as the minimum ITI level within the range of normal, the court does not consider this factor to be indicative of significant harm to the marine environment. Clearly, however, a benthic alteration is evident. The evidence failed to demonstrate any intertrophic impact.

With respect to the second factor, the evidence suggests the possibility that the Point Loma outfall is adversely affecting kelp recruitment² on the south end and the outer western edge of the kelp beds in at least two ways: (1) sediment coming from the outfall may be blanketing the kelp spore; and (2) the plume of the outfall is causing turbidity, thereby restricting the penetration of sunlight to the lower depths.

Intervenor Henderson and the City have failed to prove by a preponderance of the evidence that the outfall is not damaging the south end and the outer edge of the kelp beds. The kelp beds are flourishing, but there is a suspicious erosion of kelp beds growth along the southern third of the outer edge of the beds, and a noticeable loss of pre-outfall kelp forest at the south end. Eminently knowledgeable experts disagreed as to whether the outfall contributes to this damage, and the court is unable to find, by a preponderance of the evidence, that it does not. Clearly, many conditions present in the south end complicate any definitive conclusion.

Because of its actual and potential effect on public health, the third factor is most significant to the court. The evidence clearly establishes an elevated level of disease-carrying bacteria drifting toward the shore from the outfall, and coming to rest on the outer edges of the kelp beds, as reflected by the levels of total choliform, fecal choliform, and enterococcus present in this area. The levels of these indicators, which measure the presence of virus and bacterial pathogens, are in excess of the levels allowed under the California Ocean Plan at least ten percent of the time, and on some days these bacteria exceed 100 times the lawful level.

These bacteria create a health risk to scuba divers and other recreational water users who dive in the kelp beds. Although plaintiffs have argued that these health risks may have been understated by the trial testimony, the court is satisfied that presently the number of reported illnesses exceeds slightly the number of illnesses allowable per thousand under the California Ocean Plan. The court concludes that, although not yet an epidemic, the public health risk to divers in the kelp beds is a significant harm to the environment — in this case to humans. Furthermore, due to the ever-increasing population and now the imminent treatment of a portion of Tijuana raw sewage, these bacteria levels will continue to rise, increasing the threat to public health from virus and bacteria pathogens.

C. Conclusion Regarding Deferral and Environmental Impact

Based upon these three factors, the court finds that the City and Intervenor Henderson have not met their burden in proving that the Point Loma outfall is not causing significant harm to the environment. Moreover, the court affirmatively concludes that the Point Loma outfall is causing significant harm to the marine environment, particularly when human recreational interaction with that environment is considered. Therefore, the court will not defer consideration of the proposed consent decree in order to allow the City to apply for a § 301(h) waiver.³ The court will conduct a hearing on the earliest available date as to whether the proposed consent decree is in the public interest.

II. Penalty Issue

Plaintiffs seek total penalties in this action of $ 10 million, and argue that the penalty may only be assessed as a cash payment to the United States Treasury. The City, in arguing for the imposition of approximately $ 1.4 million in penalties, requests this court to allocate $ 1 million of such penalties to a local project which furthers the goals and purposes of the Clean Water Act, while simultaneously serving the interests of the citizens of San Diego. Both the City and Intervenor Sierra Club recommend a permanent water conservation project in the [21 ELR 21225] form of rebates to San Diego residents who convert to ULV 1.6 gallon toilets and 2.5 gallon per minute shower heads plus faucet flow restricters for sinks. Intervenor Sierra Club urges the court to set the penalties at $ 5.5 million, with $ 5 million in the form of such a local water conservation project.

A. General Findings

The plaintiffs have established by a preponderance of the evidence that the City has been in violation of the Clean Water Act almost continuously since the statute was enacted in 1972. The City's status as a perpetual violator is a result of three deficiencies in the City's sewage treatment efforts: (1) insufficient control of pretreatment of sewage by industrial users; (2) frequent sewage spills in the collection system; and (3) the absence of secondary treatment at the Point Loma Waste Water Treatment Plant.

With respect to pretreatment, the City has attained approximately 70% incomplete compliance by large and small industrial users. This level of compliance is simply inadequate under prevailing law, but it has caused insignificant, if any, injury. See infra, p.10.

In reviewing the evidence concerning spills, the court finds that since June, 1983, the City has endured approximately 3,700 sewer spills in the collection system, over 400 of which reached public waters. Over 99 million gallons of raw sewage have overflowed, 86 million of which have reached public waters. From 1986 through December, 1990, the City has experienced an average of 1.25 spills per day. Plaintiffs have established not only chronic public recreational inconvenience from quarantines and transitory harm to public waters, beaches and lagoons, but also damage to flooded residences and commercial buildings. All the while, the City has deferred hundreds of millions of dollars of capital improvement, maintenance, replacement and needed expansion to its sewer collection system.

With respect to these spills, the court concludes that the sewage treatment program in this city has been victimized by a failure of political leadership, dating back at least three decades. When confronted with a growing population and the concomitant demands on the existing system, the City Council consistently responded by refusing to spend one dollar more than minimally necessary. The City has maintained a policy of inaction except when action was literally forced upon it by state and federal orders, directives, sanctions, and threats of more severe enforcement measures. While the City grew, minimal capital was invested to replace and upgrade antiquated and obsolete collection lines and pump stations. The result is the outrageous record of spills, closures, and distress to residents over sewer backups in their homes, churches and businesses.

Finally, it is undisputed that the Point Loma treatment plant has not been in compliance with secondary treatment requirements. In response to these requirements, the City obtained a tentative waiver pursuant to § 301(h) of the Clean Water Act in 1981. Contrary to the legal requirements, however, City basically ceased updating its parallel plans for the design of secondary sewer facilities (Metro I and II), on the assumption that the waiver would be made final. When the tentative waiver was withdrawn by the EPA in late 1986, the City was not in position to move swiftly to design and build secondary treatment facilities, because it determined its parallel plans were obsolete. As a result, the City has been in daily violation of the secondary treatment requirements since EPA denied the tentative waiver.⁴

Specifically, the secondary treatment regulations mandate that 85% of the solids in the effluent be removed, and further require that the biomass of suspended solids and the Biochemical Oxygen Demand (BOD) not exceed 30 mg/l. While the average removal rate attained by the City through advanced primary treatment has been approximately 76%, the biomass of suspended solids and the BOD have far exceeded the maximum levels, averaging approximately 74 mg/l and 120 mg/l, respectively.

Over the past five years there has been a massive investment increase in the sewer system. A pretreatment ordinance has been enacted, replacement of decrepit cement collection mains has accelerated, and pump stations are being overhauled and updated with mechanical and electrical redundancy. Based upon the uncontradicted evidence, the court finds that each of these laudable efforts should have been made and completed many years earlier.

B. Penalties under the Clean Water Act

The Court applies § 309(d) of the Clean Water Act in assessing penalties against the City for its violations of the Act. The statute provides in pertinent part:

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.

1. Seriousness

In determining seriousness, the court finds that each type of violation must be considered separately, as each yields distinct conclusions.

First, the chronic sewage spills, which have plagued the City for years, constitute violations of substantial seriousness. Spills into the public waterways have required persistent quarantines, while nonpublic spills have required extensive clean-up efforts by the City and private victims.

On the other hand, the evidence suggests that in spite of an unacceptable level of compliance with the City's pretreatment ordinance by a vast majority of industrial users, there is no damage to the environment traceable to heavy metals or toxic chemicals in the sewer outfall from Point Loma. Further, the City is gradually obtaining cooperation from restaurants and lessening the unacceptable frequency of grease blockages in collection lines.

Finally, the effluent coming out of the outfall, which the Court has already found is significantly injurious to the marine environment, is not of epidemic portions, and in all likelihood should not require quarantine of any ocean areas prior to the day when secondary treatment can be achieved; constant monitoring will be necessary if quarantines are required.

2. Economic Benefit

Contrary to theposition advocated by the City, the court finds that plaintiffs' analysis of economic benefit is valid as to municipalities. While it is difficult to quantify precisely the savings realized by the City as a result of its intransigence, plaintiffs have demonstrated by a preponderance of the evidence that the City has saved in excess of $ 300 dollars over approximately the last thirty years by failing to invest in capital improvements. Residents living here in those years earned "dividends" in the form of lower sewer rates. A direct parallel to corporate operations is apparent.

3. History of Violations

As explained throughout this Memorandum Decision, the City's history of violations is extensive. In particular, the collection system problems confronting San Diego today are a direct result of decades of failed political leadership.

4. Good Faith Efforts

As discussed above, the City's record has been especially dismal with respect to the upgrade and replacement of decrepit and obsolete concrete pipes and pump stations. However, with respect to the secondary treatment violations at the Point Loma plant, the evidence reveals contradictory and inconsistent regulation by both the state and federal governments. Concurrent with the state's issuance of permits and orders reciting "deadlines" for completion of secondary treatment, the City was in possession of tentative grants of waiver from secondary treatment.

The City, at all times, attempted to comply with all discharge permits, and developed a highly efficient advanced primary treatment facility.⁵ Thereafter, when the EPA unexpectedly withdrew its tentative approval of the waiver, the fictitious "deadline" for secondary treatment suddenly became the lodestone for the plaintiffs' allegations of secondary violations. The court finds that the City's decision to pursue a § 301(h) waiver and related variances was made in good faith under the prevailing law.

[21 ELR 21226]

5. Economic Impact of the Penalty

The City is not pleading poverty and has not stated that it is unable to pay the amount requested by plaintiffs. However, insofar as plaintiffs' request would represent a transfer of wealth from the residents of San Diego to the federal treasury, the court is concerned that the only victims in this case will those residents. In addition, regardless of the penalties imposed, the proposed consent decree, if accepted, will create significant financial burdens for the City and those burdens will surely be passed on to the citizenry.

6. Other Matters as Justice May Require

By including this factor in the statutory mix, Congress clearly intended that federal courts exercise their full equitable authority. In utilizing its equitable discretion, this court is attempting to strike a balance between the related policy goals of retribution and deterrence, while at the same time providing incentives to the City to engage in prudent planning for the future.

As an initial proposition, the court finds that the City's failure to comply with federal and state regulatory mandates is at least partially mitigated by the conflicting regulatory messages sent to the City by the EPA and the State. By its very nature, the sudden decision of the EPA to revoke the City's tentative waiver after working with the City for over eight years created a dilemma for city officials which they were incapable of resolving. In its defense, the City has characterized these events as an example of the proverbial double-cross, asking of the federal government, "et tu Brute?"

Moreover, a similar scenario has been repeated by the State in its uneven application of the California Ocean Plan. Specifically, the Ocean Plan was amended so that the bacteria standards applicable to beach areas became applicable to kelp beds. Simultaneously, the State allowed various cities, including San Diego, to apply for variances. Accordingly, the deleterious health effect which the law sought to prevent - the bacterial invasion of recreational areas on the kelp beds - was allowed to continue unabated, until the State reconsidered its enforcement policies. Again, plaintiffs now seek to portray the City as a wrongdoer based upon its failure to respond quickly enough to the shifting priorities of the regulatory agencies.

The court is sensitive to the City's position in this regard, and views plaintiffs' conduct as unfortunate and unhelpful to the protection of the environment. Although the City's argument does not create a complete defense on its behalf, the court finds that it is a mitigating factor with respect to secondary treatment and Ocean Plan violations.

With an eye to the future,⁶ the court is also taking into consideration the proposed total expansion, renovation and upgrading of the San Diego Metropolitan Sewer System, including collection lines, pump stations, secondary treatment plants and satellite tertiary treatment facilities, as contained in the proposed consent decree. If the court finds this proposal in the public interest, the City will move into the twenty-first century with an environmentally protective sewer system that should be a model for the entire country.

C. Assessment of Penalties in this Case

The maximum statutory penalty under the Clean Water Act as a result of the City's violations exceeds $ 229 million.⁷ As noted above, plaintiffs urge the court to assess a $ 10 million penalty, payable immediately and exclusively to the United States Treasury. Upon consideration of the six factors partially discussed above, the court will impose a penalty of $ 3 million against the City, $ 500,000 of which is payable to the United States Treasury upon entry of judgment in this bifurcated portion of the case. The remaining $ 2.5 million will be payable to the United States Treasury on January 1, 1992, unless the City, at its option, enacts the credit project described below.

D. The Optional Credit Project

Section 251(b) of the Clean Water Act provides in pertinent part:

"It is the policy of the Congress to . . . plan the development and use (including restoration, preservation, and enhancement) of land and water resources. . . ." Moreover, § 251(g) provides in relevant part, "Federal agencies shall cooperate with State and local agencies to develop comprehensive solutions to prevent, reduce and eliminate pollution in concert with programs for managing water resources."

The court finds that § 309(d) permits the court, in applying the considerations set forth therein, to consider permanent water conservation projects as a form of penalty to be imposed upon the City. Any such project must be specific and definite, and must be consistent with the previously stated goals and objectives of the Clean Water Act. The court approves the concept of an optional project of permanent water conservation ordinances, which, if enacted in full, shall fulfill and discharge up to $ 2.5 million of the penalty imposed above.

In order for the City to avail itself of any portion of the optional $ 2.5 million project credit, the optional project must be enacted in its entirety by ordinance with an effective date of on or before January 1, 1992. The ordinances required by this project shall include, at a minimum, the following four elements:

1) All new construction permits for any residential, condominium, apartment or commercial building or hotel construction within the City of San Diego shall require installation of ULV 1.6 gallon toilets, 2.5 gal./min. or less shower heads, and restricted flow faucets in all bathrooms and kitchen sinks.

2) Before reselling any residence, apartment building, hotel, condominium, or other commercial building in the City of San Diego, the seller shall be required to retrofit all bathrooms and kitchens with ULV 1.6 gal. toilets, 2.5 gal./min. or less shower heads, and restricted flow faucets.

3) All building permits issued for any bathroom remodel, of any residence, apartment building, hotel, condominium, or other commercial building in the City of San Diego, shall require ULV 1.6 gal. toilets, 2.5 gal./min. or less shower heads, and restricted flow faucets.

4) The City shall offer rebates to residences voluntarily retrofitting to ULV 1.6 gal. toilets, 2.5 gal./min or less shower heads and restricted flow faucets in kitchens and bathrooms, at a funding level of no less than $ 500,000 per year for five years. Further, negotiations shall be undertaken with the MWD and SDCWQB so that matching funds may be obtained and the rebate program proportionally leveraged, thereby maximizing the number of residences converted to the water conserving appliances.

If the City fails to fund the entire $ 500,000 minimum in any one of the five years, the shortfall for that year will be remitted by April 15 of the following year to the United States Treasury in accordance with this optional penalty arrangement.

Upon the funding by the City of this program for five complete years, the penalty ordered by the Court will have been fully satisfied. The court will retain jurisdiction to monitor administration of this project and shall order accounting and audit information as necessary to assure complete performance of this option if it is elected by the City. All City administrative expenses of this program shall be paid from funds other than from the $2.5 million project funds described herein. The parties are requested to submit Proposed Findings of Fact and Conclusions of Law in accordance with this Memorandum Decision within ten days of the date of this decision. All prior orders of this court requiring interim compliance with the proposed Partial Consent Decree remain in effect.

1. The ITI measures the demographic makeup of species in the soft bottom.

2. Recruitment refers to the process by which the kelp reproduce.

3. The court's ruling on this issue is without prejudice to the City attempting to obtain a waiver while the proposed consent decree is being considered or during the implementation of this or any other amended consent decree.

4. Believing that further pursuit of a waiver was hopeless, the City withdrew its application in 1987, and started anew with a current program of facilities planning.

5. It is ironic that the City demonstrated good faith and diligence with respect to the Point Loma treatment plant, while concurrently turning its back on its sewer collection system.

6. Despite the clear equitable mandate prescribed by Congress, plaintiffs have argued that this court is only empowered under the Clean Water Act to look to the past in assessing penalties. The court notes the irony inherent in plaintiffs' position, inasmuch as plaintiffs have consistently, and correctly, attacked the City for its failure to consider the environmental future. Plaintiffs now invite this court to refrain from considering the City's foresight, even insofar as the court is attempting to correct the City's failures by means other than direct civil penalties. The court declines this invitation.

7. This figure represents daily penalties for pretreatment violations, sanctions for spills, and daily penalties for failure to provide secondary treatment over thelast three years.