decree also comes within the scope of the pleadings in that it addresses the issue of payment of a penalty - one type of relief directly sought in the complaint. It is the third Firefighter factor which the court finds troublesome in this setting.
The court is concerned that approval of the consent decree in its present form would not further the objectives of the CWA. In particular, fairly recent case law makes it clear that once there has been a judicial finding of liability, a court has no choice but to impose a civil penalty. As previously mentioned, the Ninth Circuit expressly adopted that view in Sierra Club II, explaining more fully:
we agree with the district court that if the payments required under the proposed consent decree are civil penalties within the meaning of the Clean Water Act, they may be paid only to the U.S. treasury. We disagree, however, that the payments are civil penalties. No violation of the Act was found or determined by the proposed settlement judgment. When a defendant agrees before trial to make payments to environmental organizations without admitting liability, the agreement is simply part of an out-of-court settlement which the parties are free to make.
Sierra Club II, 909 F.2d at 1354. That holding is consistent with § 309(d) of the CWA which unequivocally states that "any person who violates . . . , . . . any permit condition or limitation . . . , shall be subject to a civil penalty not to exceed $ 25,000 per day for each violation." 33 U.S. § 1319(d) (West Supp. 1991) (emphasis added).
In addition to the Ninth Circuit in Sierra Club II, two other Circuit Courts interpreting § 309(d) have held that once a violation has been found, a court is obligated to impose a penalty. See Atlantic States Legal Foundation v. Tyson Foods, Inc., 897 F.2d 1128, 1142 (11th Cir. 1990) ("This language makes clear that once a violation has been established, some form of penalty is required"); Chesapeake Bay Found. v. Gwaltney of Smithfield, Ltd., 890 F.2d 690, 697 (4th Cir. 1989) ("This language coupled with § 1365(a) indicates that, once an ongoing violation is shown, the court is virtually obligated to assess penalties").
It appears to the court that if it were to approve of the consent decree as presently worded, such decree would contravene the objectives of the CWA. It is well settled that the parties may not agree to take action, even in the form of a consent decree, which conflicts with or violates the very statute upon which the complaint is based. See Firefighters, 478 U.S. at 526, 106 S. Ct. at 3077. Thus, because the relief sought in the proposed consent decree (payment to private environmental organizations) conflicts with certain provisions of the CWA and the case law construing that Act, once again, but this time for different reasons, the court cannot give its imprimatur to the proposed consent decree.
The parties make several attempts to persuade the court that this case is like Sierra Club II, and therefore payments to private environmental organizations, such as those listed in the proposed consent decree, are proper. First, the parties contend that the grant of partial summary judgment here was not a final judgment in that ADM could either seek modification from this court
and/or eventually appeal to the Second Circuit. Based upon that premise, the parties argue that no liability has been judicially established here, and thus this case is identical to Sierra Club.
The parties are correct that generally an order which grants partial summary judgment cannot be the sole basis for an appeal, since it is nonfinal. See New York v. Exxon Corp., 932 F.2d 1020, 1023 (2d Cir. 1991) (a grant of summary judgment leaving open the issues of damages and affirmative defenses is only partial, and therefore not appealable) (quoting Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 744, 47 L. Ed. 2d 435, 96 S. Ct. 1202 (1976)). The court is not convinced however that the finality, or lack thereof, of the order finding liability should enter into the court's analysis of the civil penalty issue. In the court's opinion, the parties are reading into Sierra Club II a finality requirement which simply is not there. The Ninth Circuit did not say that civil penalties must be imposed once judicial liability is finally established. Rather, the obvious implication from Sierra Club II is that once judicial liability is established, a civil penalty is mandatory.
The undeniable fact remains that in the present case the court has already determined liability. Thus, even if ADM were to choose not to enter into a consent decree, and await judicial resolution of the damages issue, that would not suspend or terminate the existence of the liability finding. Thus, in the court's view, the fact that the judicial finding of liability is not final is of no consequence here.
The parties also contend that, as in Sierra Club II, the proposed consent decree contains no admission of liability by ADM, and they should thus be free to enter into such decree on their own terms. The absence of an admission by ADM in the consent decree, however, is immaterial given the court's determination that liability exists. The parties cannot circumvent the civil penalty obligation by simply ignoring the court's finding of liability, or by refusing to acknowledge such finding in the form of an admission. Moreover, as the court observed in its earlier decision, the proposed consent decree explicitly states that the payments are intended to serve as a "penalty" to ADM for its statutory violations. Friends of the Earth, No. 84-CV-413, slip op. at 9 (N.D.N.Y. July 19, 1990).
The decree also states:
the sum set forth in the preceding paragraph shall completely discharge defendant from any liability under 33 U.S.C. 1365 arising from the violations alleged in the Complaint and found by this Court in its Memorandum Decision and Order of June , 1986. . ."
Proposed Consent Decree at 3 (emphasis added). Thus, although not determinative, the court notes that from all of the foregoing, it seems that the parties, at least when the consent decree was initially drafted, recognized that ADM has an obligation to pay a civil penalty.
Finally, as previously discussed, it is well established that civil penalties must be paid to the United States Treasury. Therefore, because the court has determined that civil penalties are required here, the parties have no choice, even in a consent decree, but to make those penalties payable to the Treasury. That is especially so given the sound reasoning of the court in United States v. Roll Coater, Inc., 21 Envtl. L. Rep. 21073, 1991 U.S. Dist. LEXIS 8790 (S.D. Ind. 1991), a case relied upon by the Government herein. In Roll Coater, following a bench trial where the court found CWA violations, it imposed civil penalties payable only to the Treasury.
As in the present case, the Government in Roll Coater argued that all penalties assessed pursuant to the CWA had to be paid to the Treasury. Roll Coater argued, on the other hand, that the court, in the exercise of its equitable jurisdiction, could allow other forms of restitution in the form of payments to support private environmental projects. Although the court agreed with that general proposition advanced by Roll Coater, it declined to allow any other form of restitution in that case because the claim for injunctive relief had been dismissed. Therefore, the court reasoned that "without this claim for injunctive relief, the Court lacks equitable jurisdiction to grant Roll Coater's request for an alternative remedy." Id. at 24. Based upon the court's reasoning in Roll Coater, this court has some reservations as to whether it would be a proper exercise of its jurisdiction to allow plaintiffs to make payments to private environmental organizations when there are no claims for injunctive relief remaining.
The court offers one last observation with respect to the necessity of a civil penalty here. In its supplemental memorandum of law, ADM requested that, in the alternative, the court allow the parties to simply settle out of court. In support of that request for alternative relief, ADM relies upon a portion of a transcript in the case of Connecticut Fund for the Environment v. The Upjohn Co., No. N85-349, slip op. (D. Conn. 1990).
Apparently the court in Connecticut Fund allowed the parties to enter into a settlement agreement in a CWA case without notifying the United States Attorney General. Id. at 832. Even assuming that that procedure comports with the CWA, (and the court has serious reservations as to whether it does), Connecticut Fund stands in marked contrast to the present case. In Connecticut Fund, the United States had not been made aware of that case at any time. Here, on the other hand, the Government has been aware of this case at least since it first received notice of the proposed consent decree in August, 1989. And in fact, the Government filed objections and a supplemental memorandum of law, and has been an active participant since the possibility of a consent decree first arose. So, the parties cannot now seek to reach an out of court settlement, in an effort to evade the valid concerns raised by the Government herein.
Although the court has now determined that ADM must pay a civil penalty, the issue of the amount of such penalty is still unresolved. At the conference held this past spring, the court expressed some concern whether it should undertake an independent evaluation of the penalty amount, and the scope of such evaluation, if any. It is clear from reading the supplemental memoranda of law submitted by ADM and by the Government that they basically agree: in reviewing this proposed consent decree, the court need only ensure itself that payments thereunder are fair and reasonable. The court need not undertake the type of detailed analysis contemplated by 33 U.S. § 1319(d);
and, in fact, the court cannot undertake such an analysis as this juncture because, as ADM points out, the factual evidence required thereunder is not before the court. Requiring such evidence to be produced would transform this supposedly limited settlement into a full-blown hearing on the issue of relief, something the parties presumably tried to avoid by agreeing to a consent decree in the first place.
The court agrees that the scope of its review with respect to the actual dollar amount is relatively limited in light of the procedural posture of this case. After reviewing the record in this case, including the most recent submissions pertaining directly to the civil penalties issue, and taking into account the representations made by counsel during the course of the April, 1991, conference, the court believes that although the penalty could have been larger, it is sufficient under the unique facts presented herein. That view is compatible with the view taken by the district court in Sierra Club v. Coca-Cola Corp., 673 F.Supp. 1555 (M.D. Fla. 1987), a case relied upon by both ADM and the Government. In that case the Sierra Club contended that the amount of the civil penalty in the proposed consent decree was too small. Even though the court agreed that "the civil penalty could have been larger, perhaps much larger," it nonetheless approved of that decree. Id. at 1557. In so doing, the court reasoned: "the Court is unable to conclude that the $ 50,000 fine will denigrate the seriousness of Coca Cola's past violations, encourage future violations, or in any other way disserve the goals of the Clean Water Act." Id.
Based upon its knowledge of the case, albeit limited when compared with that of the parties and the Government, it appears to the court that a payment higher than $ 25,000.00 would certainly have been proper here. Nevertheless, as in Sierra Club v. Coca Cola, the court is unable to find that a $ 25,000.00 civil penalty will "denigrate the seriousness" of ADM's past violations. See, id. Nor can the court conclude that in this case a $ 25,000.00 civil penalty would in any other way disserve the goals of the CWA. Therefore, if the parties still desire to resolve this action by way of a consent decree, they are free to file an amended proposed consent decree providing for payment of a civil penalty to the United States Treasury in the amount of $ 25,000.00.
To summarize, upon reconsideration, the court denies approval of the consent decree in its current form. Revision of the consent decree as just described, however, would be a proper and acceptable vehicle for resolving this action once and for all.
IT IS SO ORDERED.
DATED: January 3, 1992
Neal P. McCurn
Chief, U.S. District Judge