Foster et al v. United States Environmental Protection Agency et al
Filing
264
MEMORANDUM OPINION AND ORDER RESPECTING REMEDIES directing that within 120 days of the date of this order, the counterclaim defendants submit to the EPA an evaluation of the number of credits necessary to compensate for impacts to waters of the Unite d States resulting from the loss of the stream segments; the EPA shall notify the counterclaim defendants and the court whether it agrees that the West Virginia Stream Wetland and Valuation Metric has been correctly calculated; if the EPA agrees with the calculation, the counterclaim defendants have 90 days to purchase those credits from a stream mitigation bank, unless within 30 days after receipt of the EPA's agreement with the calculation, the counterclaim defendants file a motion seekin g review thereof; if the EPA does not agree with the calculation and the parties are unable to resolve the issue by agreement within 60 days after the EPA's rejection, the counterclaim defendants have another 30 days to file a motion seeking rev iew thereof; once the court has been notified that the credits have been purchased or has ruled on a review thereof as the case may be, a final judgment order carrying into effect the foregoing will be entered; if the counterclaim defendants, within the initial 120-days, fail to submit to the EPA the evaluation described above, any party to this action may seek entry of a final judgment order herein. Signed by Judge John T. Copenhaver, Jr. on 8/29/2019. (cc: counsel of record; any unrepresented parties) (kew)
Case 2:14-cv-16744 Document 264 Filed 08/29/19 Page 1 of 12 PageID #: 8143
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
RON FOSTER, individually, and
FOSTER FARMS, LLC and
MARKETING & PLANNING SPECIALISTS
LIMITED PARTNERSHIP,
Plaintiffs,
v.
Civil Action No. 2:14-16744
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY and
GINA MCCARTHY, in her official capacity
as Administrator, UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY,
Defendants.
MEMORANDUM OPINION AND ORDER RESPECTING REMEDIES
In accordance with the court’s Memorandum Opinion and
Order and Findings of Fact and Conclusions of Law this day
entered, the court considers the remedies that should be imposed.
The issue has been briefed by both parties, each having
recommended a remedy.
The EPA, the prevailing party, seeks both a civil
penalty pursuant to 33 U.S.C. § 1319(d), and injunctive relief
pursuant to 33 U.S.C. § 1319(b).
Foster does not dispute that
both a civil penalty and injunctive relief is an appropriate form
Case 2:14-cv-16744 Document 264 Filed 08/29/19 Page 2 of 12 PageID #: 8144
of remedy, but, in particular, disagrees with the EPA as to the
amount of the civil penalty.
Turning first to the issue of injunctive relief, the EPA
suggests that Foster perform remediation in the form of
“compensatory mitigation at least at the rate they would have had
to perform had they complied with the permit process.”
States’ Remedy Brief, “ECF # 251,” at 1.
United
Specifically, the EPA
proposes:
that the Court direct Plaintiffs to retain a qualified
consultant to calculate and submit to the U.S.
Environmental Protection Agency (EPA) the West Virginia
Stream and Wetland Valuation Metric (SWVM) credit value
of the filled portions of RR1, RR2, RR3, and RR4. Upon
EPA’s agreement that the SWVM credit value has been
correctly calculated, the United States proposes that
the Court direct Plaintiffs to provide off-site
compensatory mitigation for that number of SWVM credits
within the Little Kanawha watershed. The United States
prefers that Plaintiffs purchase those credits from a
mitigation bank, but Plaintiffs could purchase credits
from West Virginia’s in-lieu fee program, or perform
permittee-responsible mitigation in the amount of the
SWVM credits calculated.
Id. at 2.
The Clean Water Act, (“CWA”), authorizes the EPA to seek
“appropriate relief” for any violations, “including a permanent or
temporary injunction.”
33 U.S.C. § 1319(b).
The district court
“ha[s] authority to issue such restorative orders so as to
effectuate the stated goals of the Clean Water Act ‘to maintain
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the chemical, physical, and biological integrity of the Nation's
waters,’ 33 U.S.C. § 1251 (1983).”
United States v. Cumberland
Farms of Connecticut, Inc., 826 F.2d 1151, 1164 (1st Cir. 1987)
In evaluating remedial proposals for CWA violations,
“courts have considered three factors: (1) whether the proposal
‘would confer maximum environmental benefits,’ (2) whether it is
‘achievable as a practical matter,’ and (3) whether it bears ‘an
equitable relationship to the degree and kind of wrong it is
intended to remedy.’”
United States v. Deaton, 332 F.3d 698, 714
(4th Cir. 2003) (quoting Cumberland Farms, 826 F.2d at 1164).
Generally, “restoration of a violation site to its pre-violation
condition is the preferred remedy.”
United States v. Bedford, No.
2:07-CV-491, 2009 WL 1491224, at *14 (E.D. Va. 2009) (citing
Cumberland Farms, 826 F. 2d at 1161-65).
But where, as here,
restoration of the damaged site is not feasible, compensatory
mitigation serves as another form of remediation.
See id. (“Other
forms of remediation are compensatory mitigation, such as
purchasing credits at a mitigation bank to accomplish off-site
creation of wetlands, or ensuring the preservation of existing
wetlands.” (internal citations omitted)).
“Compensatory
mitigation can be accomplished in one of three ways: 1) mitigation
banks, 2) in-lieu fee programs, or 3) permittee-responsible
mitigation, with the use of mitigation banks being the preferred
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method.”
Walther v. United States, No. 3:15-CV-0021-HRH, 2015 WL
6872437, at *2 (D. Alaska 2015) (citing 33 C.F.R. § 332.3).
Here, the court finds that the off-site compensatory
mitigation proposed by the EPA, to be completed by Foster through
purchasing the credits owed -- as determined by a qualified
consultant to be retained by Foster and verified by the EPA -from a mitigation bank, would confer maximum environmental
benefit, is achievable as a practical matter, and bears an
equitable relationship to the environmental harm sought to be
remedied.
Indeed, the court notes that Foster does not oppose
this form of remediation, but requests that the plaintiffs be
given the choice of the following:
1. Preservation of existing Plaintiff owned [streams],
and, if necessary, purchase of additional
stream lengths of equal or greater WVSWVM
score to be preserved from any future loss by
recorded environmental covenant in perpetuity;
or
2. In lieu fee; or
3. On site mitigation performed by the Plaintiffs or
contracted at Plaintiffs’ expense; or
4. Off site mitigation performed by the Plaintiffs or
contracted at Plaintiffs’ expense; or
5. Off site purchase of mitigation bank credits of at
least equal WVSWVM score; or
6. Some combination of any or all of the preceding
options.
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Plaintiffs’ Remedy Brief, “ECF # 253,” at 3.
However, inasmuch as
off-site mitigation through purchasing credits from a mitigation
bank is the preferred method of the EPA in this case as well as in
general, see 33 C.F.R. § 332.3 (“For these reasons, the district
engineer should give preference to the use of mitigation bank
credits when these considerations are applicable.”), the court
finds it appropriate to direct Foster to perform the specific
remediation as suggested by the EPA.
Accordingly, the court
adopts the remediation suggestion of the counterclaim plaintiffs.
As for civil penalties, the counterclaim defendants
assert that only a nominal penalty of $1 is warranted, whereas the
counterclaim plaintiffs assert that $840,000 is appropriate.
The Clean Water Act provides that violators “shall be
subject to a civil penalty not to exceed $25,000 per day for each
violation.”
33 U.S.C. § 1319(d).
The Fourth Circuit has
interpreted this language to mandate a civil penalty: “This
language leaves little doubt that, under the circumstances of this
case, a penalty in some form is mandated.”
Stoddard v. W.
Carolina Reg'l Sewer Auth., 784 F.2d 1200, 1208 (4th Cir. 1986);
see also Atl. States Legal Found., Inc. 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
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required.”).
Courts are afforded broad discretion in setting the
penalty amount.
See United States v. Smithfield Foods, Inc., 191
F.3d 516, 526–27 (4th Cir. 1999) (“Because of the difficulty of
determining an appropriate penalty in a complex case such as this
one, we give deference to the ‘highly discretionary calculations
that take into account multiple factors [that] are necessary in
order to set civil penalties under the Clean Water Act.’” (quoting
Tull v. United States, 481 U.S. 412, 427 (1987)); and Catskill
Mountains Chapter of Trout Unlimited, Inc. v. City of New York,
451 F.3d 77, 87 (2d Cir. 2006) (“District courts have broad
discretion in calculating civil penalties under the CWA.”).
To determine the appropriate civil penalty, “the court
may begin either with the violator's estimated economic benefit
from noncompliance (known as the ‘bottom-up’ method) or with the
statutory maximum allowable penalty (known as the ‘top-down’
method).”
Catskill Mountains, 451 F.3d at 87; and see Smithfield
Foods, Inc., 191 F.3d at 528, n.7 (“the CWA does not require the
use of either [the bottom-up or the top-down] method, however,
courts have applied both.”).
From there, courts adjust the value
provided from either method by applying the six factors set forth
in the CWA: “[(1)]the seriousness of the violation or violations,
[(2)]the economic benefit (if any) resulting from the violation,
[(3)]any history of such violations, [(4)] any good-faith efforts
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to comply with the applicable requirements, [(5)] the economic
impact of the penalty on the violator, and [(6)] such other
matters as justice may require.”
33 U.S.C. § 1319.
Here, the court employs the bottom-up approach, which is
also used by the EPA in its remedy brief.
ECF # 251 at 10 – 20.
Specifically, the EPA proposes that the penalty must be at least
$84,438, which it calculates as Foster’s economic benefit reaped
from the CWA violations.
Id. at 14-15.
The EPA reaches this
number by taking the net increase in value on the entirety of
Parcel D3 -- $337,751 -- as provided by records of the Wood County
Tax Assessor, and attributing 25% (i.e., $84,438) of that net
increase to Pad 4, which is the portion of parcel D3 where the
violations took place.
Id.
Importantly, the market value in 2017
provided by the EPA is generally consistent with that found by the
court at pages 39 - 40 of its Findings of Fact and Conclusions of
Law.
Finding the EPA’s calculation to be a reasonable estimate
for the increase in value to Parcel D3, the court uses $84,438 as
a base.
Turning, then, to the six factors set forth in the Clean
Water Act, the court first considers the seriousness of the
violation.
In determining the seriousness of defendants'
violations, “the court will consider the frequency and severity of
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the violations, and the effect of the violations on the
environment and the public.”
United States v. Smithfield Foods,
Inc., 972 F. Supp. 338, 343 (E.D. Va. 1997).
Foster used 100,000
cubic yards of fill material to fill 1,970 linear feet of stream,
consisting of four streams on his property, which work took two
months or more and cost Foster $352,000.
Conclusions of Law at 10-11.
Findings of Fact &
The filled streams each
significantly affect the chemical, physical, and biological
integrity of downstream waters, and cannot feasibly be restored to
their previous states.
This factor favors a substantial penalty.
Second, as for the economic benefit to Foster from the
violations, the court notes that although the property value may
have increased in the amount calculated by the EPA, in sum Foster
has sustained a substantial loss by virtue of this dispute.
As
noted in the Findings of Fact and Conclusions of Law at page 39,
Foster has been precluded from developing the land from November
2010 to date, thereby suffering a substantial financial setback.
Because Foster has already lost considerably more than any
economic benefit he received from the violation, this factor
weighs against imposing a substantial penalty.
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Third, as for any history of violations, no such history
by Foster has been presented to the court.
This appears to be a
first time environmental offense by plaintiffs.
Fourth, as for any good faith efforts to comply with the
CWA, the court notes that although Foster was alerted to the
potential need to obtain a permit by comments to his contractor
made by EPA inspectors who were inspecting a nearby property, he
did not seek a permit or contact the EPA to determine whether a
permit was required.
Foster did, however, promptly engage Fox
Engineering Company and Dan Metheny, an engineer therewith, to
inquire about the need for a permit; Mr. Metheny informed Foster
that no permit was needed.
Law at 9.
Findings of Fact and Conclusions of
There is no indication that Foster was aware that Mr.
Metheny was not qualified to make that determination.
On balance,
this factor does not significantly aid the court in determining an
appropriate penalty.
Fifth, as for the economic impact of the penalty on the
violator, Foster is of sufficient wealth that a penalty at the EPA
starting point of $84,438 would not be unduly onerous.
Sixth, when considering such other matters as justice
may require, the court notes that the compensatory mitigation
required of Foster will likely have a severe economic impact on
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him.
See Stoddard, 784 F.2d at 1209 (“The amount of the penalty
to be levied is, of course, discretionary with the court. . . .
[T]he trial court may consider the fact of the substantial award
of damages in the pendent claim and the need to apply available
resources toward correcting the plant's problems.”), and see also
United States v. Key W. Towers, Inc., 720 F. Supp. 963, 966 (S.D.
Fla. 1989) (“the final consideration in determining the amount of
the penalty, ‘such other matters as justice may require,’ leads
the court to provide the defendants with an option. Specifically,
because of the parties and the court's primary concern of
protecting the pond and providing a pollution-free habitat for the
migratory birds and wildlife, the court will allow the defendants
the option of paying the $250,000 fine or deeding to a charitable
group, such as the Florida Land Trust, the 1.9–acre pond and a 50–
foot buffer zone around that pond.”).
Taking all of these factors into account, the court
finds that a civil penalty that is sufficient but not greater than
necessary to effectuate the goals of the CWA and to adequately
punish the counterclaim defendants for their violations and deter
future violators is one that exceeds the economic benefit the
counterclaim defendants are deemed to have received from the
violation, and fixes the civil penalty at $100,000.
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Accordingly, based on the foregoing discussion, it is
ORDERED that, within 120 days of the date of this order, the
counterclaim defendants submit to the EPA an evaluation, performed
in conformity with the West Virginia Stream and Wetland Valuation
Metric, of the number of credits necessary to compensate for
impacts to waters of the United States resulting from the loss of
the stream segments that this court in its Memorandum Opinion and
Order and Findings of Fact and Conclusions of Law found that
counterclaim defendants filled in violation of the Clean Water
Act.
The EPA shall thereafter promptly notify the counterclaim
defendants and the court whether it agrees that the West Virginia
Stream Wetland and Valuation Metric has been correctly calculated.
Upon receiving such notification that the EPA agrees with the
calculation, the counterclaim defendants shall, within 90 days
therefrom, purchase those credits from a stream mitigation bank
pursuant to the procedures set out in 40 C.F.R. § 230.90-98,
unless within 30 days after receipt of the EPA’s agreement with
the calculation, the counterclaim defendants file a motion seeking
review thereof.
Alternatively, if the EPA does not agree with the
calculation and the parties are unable to resolve the issue by
agreement within 60 days after the EPA’s rejection, the
counterclaim defendants shall within another 30 days file a motion
seeking review thereof.
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Once the court has been notified that the credits have
been purchased or has ruled on a review thereof as the case may
be, a final judgment order carrying into effect the foregoing will
be entered.
If, within the initial 120-day period noted on page 11,
the counterclaim defendants fail to submit to the EPA the
evaluation described above, any party to this action may seek
entry of a final judgment order herein.
The Clerk is directed to transmit copies of this order
to counsel of record and any unrepresented parties.
ENTER:
12
August 29, 2019
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