United States v. Velsicol Chemical Corp.

No. C-75-462 (W.D. Tenn. August 31, 1978)

The court imposes a civil penalty of $30,000 for more than 300 violations of the pretreatment limitations contained in defendant's national pollutant discharge elimination system (NPDES) permit which restricts discharges of the pesticides endrin and heptachlor into the municipal sewage treatment plant to one pound per day. Neither willfulness nor proof of actual harm is required for imposition of a civil penalty under § 309(d) of the Federal Water Pollution Control Act. The court points to defendant's failure to make a diligent effort to comply with the permit and the toxic nature of the effluent being illegally discharged as additional factors relevant to the determination of the appropriate amount of the penalty to be assessed.

Counsel for Plaintiff
%w. Hickman Ewing, Ass't U.S. Attorney
10th Floor Federal Bldg., Memphis TN 38103
(901) 521-4231

Counsel for Defendant
William D. Evans, Jr.
Montedonico, Heiskell, Davis, Glanker, Brown & Gilliland
Suite 2000, One Commerce Square, Memphis TN 38103
(901) 525-1322

James W. Gentry, Jr.
Gentry & Boehm
503 Pioneer Bldg., Chattanooga TN 37402
(615) 756-5020

[8 ELR 20745]

McRae, J.:

Findings of Fact and Conclusions of Law

The United States initiated this action by filing a Complaint at the request of Region IV of the United States Environmental Protection Agency (EPA or the Agency). This action seeks civil penalties for defendant's continued violation of §§ 301(a) and 307(d) of the Federal Water Pollution Control Act Amendments of 1972 (of FWPCA or the Act), 33 U.S.C. § 1311(a) and § 1317(d). The United States alleges that defendant Velsicol Chemical Corporation violated the terms and conditions of its National Pollutant Discharge Elimination System (NPDES) permit, issued pursuant to § 402(a) of the Act, 33 U.S.C. § 1342(a), and continued operation of its facility while not complying with its interim pretreatment standards for endrin and heptachlor which were established and set forth in said permit.

On November 26, 1975, defendant filed a Motion to Dismiss the Complaint for failure to state a claim upon which relief can be granted and for lack of jurisdiction over the subject matter. Velsicol's Motion to Dismiss was denied by an Order entered January 6, 1976. Noting that Velsicol's discharge throught the City of Memphis Waste Water Collection System (the City System) does not remove its actions from the scope of the FWPCA, the court held that Velsicol's discharge into the Mississippi River through the City System satisfied the statutory requirements of discharging into "water of the United States." Sections 301(a) and 502(7), 33 U.S.C. §§ 1311(a), 1362(7). The Order also declared that the statutory definition of "treatment works," § 212(2)(B) of [8 ELR 20746] the Act, 33 U.S.C. § 1292(2)(B), is sufficiently broad to encompass the City System, which does not treat the waste flowing through it but merely transmits it to the Mississippi River. Thus, Velsicol's discharge to the City System is subject to the provisions of § 307(b), 33 U.S.C. § 1317(b). Further, this Order acknowledged that whether Velsicol was "discharging a pollutant" pursuant to $301(a), 33 U.S.C. § 1311(a) was an ultimate question of the lawsuit not properly subject to disposition on a Motion to Dismiss.

On October 27, 1976, plaintiff filed a Motion for Summary Judgment on the issues pertaining to Velsicol's liability for civil penalties. The court granted plaintiff's motion, noting that § 301(a) of the Federal Water Pollution Control Act Amendments of 1972, 33 U.S.C. § 1311(a), imposes an absolute prohibition on the discharge from a point source of pollutants into any water of the United States by any person unless such a discharge is in compliance with §§ 301, 302, 306, 307, 318, 402, and 404. Because Velsicol had admitted discharging in excess of its permit limitations of one pound per day of endrin and heptachlor, the court found that it had violated § 301(a), 307(d), and 402(a) of the Act, 33 U.S.C. §§ 1311(a), 1317(d), and 1342(a), and therefore was subject to liability for civil penalties as provided in § 309(d) of the Act, 33 U.S.C. § 1319(d), to be determined at an evidentiary hearing pertaining to the imposition of civil penalties.

Velsicol filed a Motion to Reconsider and Motion for Summary Judgment in favor of the defendant based upon the Sixth Circuit Court of Appeals opinion in Republic Steel Corporation v. Train, 557 F.2d 91 [7 ELR 20509] (6th Cir. 1977). This court denied the motion on the grounds that there are distinguishing facts between Republic Steel and the instant case which precluded changing the court's previous ruling. Thereafter an evidentiary hearing was conducted on civil penalties. These Findings of Fact and Conclusions of Law pertain to that hearing on the civil penalties issues.

Velsicol operates a chemical manufacturing facility at 1199 Warford Street, Memphis, Tennessee. It is and has been for a number of years engaged in the manufacture of endrin and heptachlor (chlorinated hydrocarbon pesticides) at the Memphis, Tennessee manufacturing facility.

At times during the manufacture of said pesticides, certain process water containing endrin and heptachlor has been discharged into a drainage ditch known as Cypress Creek, and other process water containing those pesticides has been discharged into the City System.

On June 28, 1974, EPA issued National Pollutant Discharge Elimination System (NEDES) permit number TN0000051 (the permit to Velsicol for its discharges, inter alia, of the pesticide pollutants endrin and heptachlor into the Mississippi River through the City System. The permit required Velsicol to limit the discharge of these two pollutants to no more than one pound per day of each from December 1, 1974 through the expiration of the permit in July 1979 (Transcript, pp.149, 153; Exhibit 21). Negotiations on these limitations had begun in mid-1972 (Transcript; p.83).

In early 1972, EPA, Region IV, requested that its National Field Investigation Center in Denver, Colorado (now known as the National Enforcement Investigation Center) conduct an investigation of various pollution sources in the Memphis, Tennessee area (Transcript, p.66). The inspection of Velsicol's discharge through the City System was conducted in February 1972, and a report of the findings issued in April 1972 (Transcript, p.69; Exhibit 1). Copies of the report were forwarded to EPA. Region IV, and to Velsicol (Transcript, p.83).

Representatives from both the Denver and Region IV offices of EPA met with Velsicol officials on May 23, 1972 to discuss the conclusions of the February inspection and the possibility of a commitment by Velsicol to reduce its discharges of chlorinated hydrocarbon pesticides (Transcript, pp. 83, 296; Exhibit 45).

On June 1, 1972, EPA, Region IV, requested that Velsicol's commitment to reduce the total discharge of chlorinated hydrocarbon pesticides to less than one pound per day by June 30, 1974 be submitted in writing (Transcript, p.86; Exhibit 3). Velsicol responded August 4, 1974 with the terms of the commitment being that a discharge of not more than one pound per day of the pesticide endrin and one pound per day of the pesticide heptachlor would be met by December 30, 1974 (Transcript, pp.106, 311-A; Exhibit 7). Velsicol forwarded this commitment to EPA in writing (Transcript, pp. 109-110; Exhibit 9).

During the summer of 1972 Velsicol began negotiating with an engineering consulting firm to design a waste-water treatment facility (Transcript, p.104; Exhibit 6). That engineering firm, Ryckman, Edgerly, Tomlinson, and Associates, Inc. (RETA), issued its first report in February 1973 and a second one in March 1973 (Transcript, p.119; Exhibit 11). These reports recommended two possible means of reducing the presence of endrin and heptachlor in the defendant's process water (the two methods were carbon absorption and solvent extraction). RETA also suggested that a pilot plant be installed prior to installation of the full-scale treatment plant and that an 11-month extension be sought from EPA. This extension was requested on April 4, 1973 (Transcript, p.119; Exhibit 11), and denied by EPA on April 24, 1973 (Transcript, p.120; Exhibit 12). In its denial, EPA stated that December 1, 1974 was a realistic date for completion of a workable treatment facility.

Velsicol rejected RETA's suggested means of reduction by solvent extraction for safety reasons, and the suggested means by the carbon absorption process because it lacked practicality. In June 1973 Velsicol turned to another engineering firm, Process Engineering Development Company, in hopes of obtaining the technology to reach its goal of one pound per day for endrin and heptachlor. However, there is no evidence of reports or activity resulting from further studies by any engineering firm or individual concerning the design of a treatment facility until March 1974 (Transcript, pp. 906, 910; Exhibits 64, 79, 81).

In March 1974 a Velsicol employee proposed a time schedule for installation of a sedimentation and filtration treatment facility by December 31, 1974 (Transcript, p.925; Exhibit 64). The first equipment for the facility, however, was not ordered until July 1974 (Transcript, p.933; Exhibit 87).

In the meantime, EPA had notified Velsicol on April 1, 1974 that is intended to issue an NPDES permit to Velsicol (Transcript, p.131; Exhibit 15). Public notice of the proposed issuance of the permit was issued on May 15, 1974, and included the discharge limitations of one pound per day of endrin and one pound per day of heptachlor to be met by December 1, 1974 (Transcript, p.133; Exhibit 16). Velsicol requested administrative review of the appropriateness of the inclusion of those discharge limitations on the discharge to the City System on June 14, 1974 (Transcript, p.137; Exhibit 18), but withdrew its request on June 19, 1974, when EPA agreed to include certain language in the permit (Transcript, p.139; Exhibit 19). Velsicol did not challenge the discharge limit itself or the December 1, 1974 deadline. The NPDES permit was then issued on June 28, 1974 (Transcript, p.144; Exhibits 20, 21).

Commencing in the month of July 1974, plans, specifications, and drawings of the proposed filtration and sedimentation system were being promulgated by Velsicol personnel. In the latter part of July 1974 Dr. Daniel Marks was brought in as the Velsicol official responsible for completing the proposed planning and construction.

In the first week of August, after review of what was necessary to be done to implement the construction of the filtration and sedimentation system, Dr. Marks came to the conclusion that the December 1, 1974 date contained in the NEDES permit could not be met, and that the construction of the facilities was more complicated and more difficult than had originally been anticipated, and because of this fact, came to the further conclusion that Velsicol personnel could not implement the planned construction without help from outside engineers.

A contractual relationship was entered into between Velsicol and Ellers, Reaves, Fanning and Oakley, Inc. around the first week of August 1974, and that organization immediately commenced to do field work and then plans and specifications for the rerouting of the sewer system which was necessary for the ultimate completion of the filtration and sedimentation system.

During the month of September 1974, Ellers, Reaves, Fanning and Oakley, Inc., represented by Oscar Moser, commenced ordering or procuring necessary parts and materials. In [8 ELR 20747] the latter part of September Moser discovered that certain critical items (furan cement and acid resistant brick) were not as available as had previously been thought.

On or about October 1, 1974, the hourly employees of Velsicol went on strike. All technical personnel in the plant, including Dr. Dan Marks, undertook to perform the work formerly done by hourly employees. Therefore, Velsicol personnel who had been cooperating with the Ellers firm became largely unavilable to aid Ellers, etc., until the strike was settled in the last week of November 1974.

There was no contact between EPA and Velsicol from the time of permit issuance, June 28, 1974 until November 15, 1974, at which time Velsicol representatives met with Region IV personnel to request an extension of time to meet the December 1, 1974 deadline (Transcript, p.153). That request was denied by letter dated November 27, 1974 (Transcript, p. 159; Exhibit 23).

Velsicol proceeded with the construction of its treatment facility and forwarded reports of its construction progress to EPA on a regular basis (Transcript, pp. 160-166; Exhibits 24, 25, 26, 27, 28, 29, 30).

During the months of January, February, and March of 1975, various contracts for the construction of the sedimentation and filtration system were let and the work commenced thereon. A large amount of rain fell on the construction site during these three months, and a substantial amount of earth moving occurred because of the rerouting of the inplant sewer system. Because of this fact there was a substantial increase in the discharge of endrin and heptachlor into the Memphis waste-water collection system. This substantial increase would have occurred whenever the construction of the sedimentation and filtration system was commenced.

At this time — January, February, and March — the flow of the Mississippi River is greater than its flow in the months of July, August, and September. Thus, the dilution of the endrin and, to a lesser extent, heptachlor being discharged as a result of the construction of the filtration and sedimentation had a much smaller environmental impact upon the Mississippi River in the winter months than it did in the summer months.

A cave-in of the sewer system and settling pit, which occurred during the first part of March, further delayed the completion of the filtration and sedimentation system.

Additional labor strife, this time among some of the subcontractors on the construction site, caused a delay.

Eventually, in August of 1974, the filtration and sedimentation system was put into operation and a six-week period of "breaking in" the unit transpired (Transcript, p.165; Exhibit 30).

During this time Velsicol submitted monthly Discharge Monitoring Reports which were required by its NPDES permit (Transcript, pp. 167-172; Exhibits 31, 32, 33). These reports noted that Velsicol was discharging in excess of the one pound per day limit on a regular basis. Velsicol made its daily laboratory results available to EPA in response to EPA Interrogatories, and it has been stipulated by the parties that the laboratory data indicates that Velsicol discharged in excess of one pound of endrin and/or heptachlor on 300 days between December 1, 1974 and October 10, 1975. Since October 10, 1975, Velsicol has discharged in excess of the one pound limit for endrin and/or heptachlor on 98 days.

When EPA began its negotiations with Velsicol in 1972, it was operating under a program called the Voluntary Pollution Abatement Commitment Program (Transcript, p.84). The program was abandoned upon enactment of the FWPCA, but the commitments made thereunder were embodied in NPDES permits issued to the companies who had made the prior commitment (Transcript, pp. 115, 278).

At no time during the 180 days after passage of the Amendment of the FWPCA in October of 1972 (and, for that fact, up to the time of this trial) did the Administrator of the EPA publish proposed regulations establishing pretreatment standards for the introduction of chlorinated hydrocarbons into treatment works (as defined in § 212 of the Act).

At the time Velsicol agreed to the one pound per day limit for endrin and heptachlor, EPA was also seeking commitment from other pollution sources (Transcript, p.113). When Whittaker Corporation in Memphis, Tennessee, refused to make such a commitment, EPA instituted a civil injunctive action under the Refuse Act, 33 U.S.C. § 407 (Transcript, p.112). Velsicol was advised by EPA during the meeting in May 1972 that EPA would proceed with enforcement action unless Velsicol made the specified agreement (Transcript, p.304, Exhibit 45). The threatened litigation was a factor in Velsicol's agreeing to the commitment (Transcript, p.978; Exhibit 95).

There is nothing in the record that indicates that the December 1974 deadline could not have been met if Velsicol had commenced the design and construction of the facility in a timely manner. Two of the projects involved in the overall construction of the treatment facility had been recommended as early as February 1973 in the RETA report: the reduction of waste-water flow and sewer maintenance program (Transcript, p.736; Exhibits 11, 67).

At the meeting requested by Velsicol with EPA officials on November 15, 1974 to seek an extension of the December 1, 1974 deadline (Transcript, p.756), a letter requesting the extension was hand-delivered (Transcript, p.756; Exhibit 11). This letter stated that Velsicol's construction program had been underway since the early part of 1974. However, Velsicol representatives testified that the construction was not actually begun until January 1975 (Transcript, p.805; Exhibit 17).

The record reflects that Velsicol's reports to EPA did not report the actual results of its monitoring of its discharges of endrin and heptachlor. Instead of reporting the actual analytical results as required by its NPDES permit, Velsicol developed a statistical method for disregarding certain high values found by its laboratory (Transcript, p.955; Exhibit 42). The amounts of the pesticides reported on its monthly Discharge Monitoring Reports do not, therefore, reflect the true analytical results found in Velsicol's laboratory for January, February, March, April, May, August, and September 1975 (Transcript, pp.1006-1010; Exhibits 35, 36, 37, 38, 39, 40, 41).

The testimony of experts for both parties indicates that the direct hazard of Velsicol's discharge to fish and other acquatic organisms in the Mississippi River is minimal as far as impaired growth, mortality, or reproductive effects are concerned (Transcript, pp. 379, 621, and 624). There is, however, a more subtle effect. Aquatic organisms accumulate certain organic materials, such as chlorinated hydrocarbon pesticides, in their bodies so that if an organism lives in water with a low concentration of the chemical there will be a higher concentration of the chemical in the organism after it has lived in that environment for awhile (Transcript, p. 348).

This residue of chemical accumulated in the fish or other aquatic organism is not sufficient to cause any obvious effect in the fish (Transcript, p.379), but it may be enough to make the fish unacceptable for other uses. For example, the Food and Drug Administration has prepared guidelines on the amount of pesticide residue which is acceptable in fish used for human consumption and fish used in animal feed (Transcript, pp. 365, 629, 633). For both endrin and heptachlor, the action level for human food is 0.3 parts per million, and for animal feed 0.03 parts per million (Transcript, p.366; Exhibit 52).

Both Dr. Mount, for plaintiff, and Dr. Macek, for defendant, calculated the concentration of pesticides in the Mississippi River from Velsicol's discharge using similar assumptions except for the difference of using monthly versus daily means for river flow and discharge concentrations (Transcript, pp. 362 and 613). Dr. Mount calculated the residue of pesticide accumulated in aquatic organisms as a result of these concentrations (Transcript, pp. 362, 364; Exhibit 50).

The important fact that emerges from the testimony of both experts is that Velsicol's discharge of chlorinated hydrocarbon pesticides to the Mississippi River was sufficient, of itself, to cause the calculated concentration of heptachlor, alone, in the fish to exceed FDA residue levels for human food in two months and for animal feed in ten months (Transcript, p.367). This calculation ignores other sources of endrin and heptachlor to the river and the additional burden of other chlorinated hydrocarbons which may be present in the river (Transcript, pp. 380, 506, 513).

The court has held previously in this case that Velsicol's [8 ELR 20748] NPDES permit, issued pursuant to § 402(a)(1) of the Act, 33 U.S.C. § 1342(a)(1), limits the amounts of the pesticide pollutants discharged by defendant into the City of Memphis Wastewater Collection System (and, thus, into the Mississippi River) to a maximum of one pound of each pollutant. Velsicol has admitted that it discharged in excess of the permit limits for endrin and/or heptachlor on 300 days between December 1, 1974 and October 10, 1975. Defendant has thus violated its permit on at least 300 days.

Under § 309(d) of the FWPCA, 33 U.S.C. § 1319(d), Velsicol is subject to a civil penalty of up to $10,000 per day of violation.

There is no requirement of willfulness or negligence. The determination of the appropriate amount of the penalty is "committed to the informed discretion of the district judge." United States v. Ancorp National Services, Inc., 516 F.2d 198, 202 (2d Cir. 1975), and "depends on the facts of each case." United States v. Swingline, Inc., 371 F. Supp. 37, 46 (E.D.N.Y. 1974).

Neither are civil penalties tied to damages actually suffered, American Fidelity & Gas Co. v. J.A. Nichols Co., 173 F.2d 830 (10th Cir. 1949). In this regard, civil penalties bear some similarity to punitive damages. Their object should be to act as deterrant: first, to discourage the offender himself from repeating his transgression; and second, to deter others from doing likewise. Collins v. Brown, 268 F. Supp 198, 201 (D.D.C. 1967).

In passing the 1972 Amendments to the Federal Water Pollution Control Act, Congress recognized the public interest in the restoration and maintenance of the integrity of the nation's waters, and established strong enforcement procedures in § 309, 33 U.S.C. § 1319 to insure that this national interest is effectively protected. Accomplishment of that national policy depends in large part on the willingness, whether voluntary or litigated, of the polluters to proceed with "energetic steps" to eliminate water pollution.

Because the imposition of civil penalties does not depend upon a finding of willfulness, the situation is similar to punishment for civil contempt. United States v. Swingline, Inc., supra, at 44. A lack of diligent effort to comply with a court order is sufficient to support a finding of contempt. One court required the taking of "energetic steps" to comply with the court order. Babee-Tender Co. v. Scharco Mfg. Co., 156 F. Supp. 582, 587 (S.D.N.Y. 1956). The Swingline case, cited In re D.I. Operating Co., 240 F. Supp. 672, 677 (D. Nev. 1965), further noted that an inability created by defendant to comply with a court order is no defense to a charge of contempt. Id. at 45.

The proof in this case shows that compliance was impossible by December 1, 1974 because Velsicol started planning and construction of the treatment system too late. Velsicol accepted the one pound per day limitations two years prior to August 1974. There is no evidence that had Velsicol been more diligent in developing a treatment system it could not have been in compliance.

At the time of permit issuance, Velsicol did not object to either the limitations on its discharge or the compliance deadline. When it recognized it could not meet the deadline, it waited until the date was almost upon it to request an extension, and even then did not accurately indicate when it had commenced the planning and construction.

In addition, Velsicol did not report all actual analytical data as to the amount of its discharge of endrin and heptachlor. It ignored certain high values, using instead a statistical method of data analysis.

The toxic nature of the effluent is also relevant in determining the appropriate civil penalty to be assessed. Pesticide manufacturers such as Velsicol must be held to the highest degree of care due to the well-known hazardous nature of their products. This has been the rule in civil tort liability cases involving injuries from pesticides, and some jurisdictions have been developed a standard of strict civil liability for such cases. See, e.g., Colvin v. John Powell & Co., 77 N.W.2d 900, 907 (Neb. 1956); Young v. Garter, 363 P.2d 829 (Okla. 1961); Loe v. Lenhardt, 362 P.2d 312 (Ore. 1961). Furthermore, some jurisdictions have held that a pesticide manufacturer has a duty towarn all potential users of the danger of his product to the environment and to humans.See McClanahan v. California Spray-Chemical Corporation, 194 Va. 842, 75 S.E.2d 712, 717 (1953); Gonzales v. Virginia-Carolina Chemical Company, 239 F. Supp. 567, 572 (E.D.S.C. 1965).

The higher degree of care as noted by the cases cited above translates into a greater responsibility to take actions necessary to comply with laws protecting the public interest, such as environmental regulations. This responsibility demands that Velsicol's efforts to meet its permit requirements should be made with the "sense of urgency" noted in the Swingline case, supra, at 40. Velsicol acted with no sense of urgency. The indifferent corporate attitude demonstrated by Velsicol is more serious in light of the toxic nature of the pesticide pollutants being discharged.

Thus, it is the court's conclusion that the imposition of total civil penalty of $30,000 for all violations up to the date of the hearing on the imposition of civil penalties is justified by Velsicol's failure to exercise diligence in its attempts to comply with its permit and its failure to comply. The imposition of the penalty in that amount it further justified due to the toxic nature of the pollutants discharged by Velsicol.

The clerk is directed to enter a judgment in favor of the United States in the amount of $30,000 in accordance with the court's Ruling Upon Plaintiff's Motion for Summary Judgment filed November 10, 1976, and these Findings of Fact and Conclusions of Law.