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February 20, 2002


The opinion of the court was delivered by: Cindrich, District Judge.


I. Introduction

This is an action by the United States for civil penalties for violations of the Clean Water Act, 33 U.S.C. § 1311, 1317 ("the Act"). The case covers five western Pennsylvania steel plants owned and operated by defendant Allegheny Ludlum Corporation ("ALC"), one of the few remaining steelmakers in the area. The plants are grouped for compliance purposes as the Vandergrift Facility, the Brackenridge Facility (consisting of the Brackenridge and Natrona Plants), and the West Leechburg Facility (consisting of the West Leechburg and Bagdad Plants). See Joint Stipulation of Facts, Doc. No. 269. After a lengthy period of litigation, including a trial before a jury, the court finds that ALC has violated the Act in ways that justify a significant penalty.

ALC manufactures stainless and specialty steel. Steelmaking requires large amounts of water, which ALC plants draw from adjacent rivers, the Allegheny and the Kiskiminetas, or Kiski. ALC uses the river water in two ways: as process water and non-contact cooling water. Process water is used directly in production and makes contact with steel or steelmaking equipment. Process water becomes contaminated and is collected and treated in ALC's treatment plants before being returned to the river. Non-contact cooling water, as its name implies, flows through pipes and vessels that are physically separated from direct contact with steel in production. Such water provides a medium by which heat is transferred away from the hot metal and surrounding equipment.

The steelmaking process generates a considerable amount of pollutants which must be monitored and controlled pursuant to the Clean Water Act. The Act prohibits the discharge of any pollutants into the navigable waters of the United States, except as expressly authorized under the Act. 33 U.S.C. § 1311(a). The Act provides for the administration of the National Pollution Discharge Elimination System ("NPDES") to regulate pollution. The NPDES authorizes the U.S. Environmental Protection Agency to issue permits regulating the release of pollutants. Id. § 1342(a). States may participate in pollution regulation under the Act. Id. § 1342(b); see generally PIRG v. Hercules, Inc., 50 F.3d 1239, 1242 (3d Cir. 1995). Through this system, the Commonwealth of Pennsylvania also regulates pollution discharged by ALC.

ALC had been operating the Brackenridge and West Leechburg plants when it purchased the Vandergrift facility in 1988. From 1988 until 1998, the Vandergrift plant discharged its wastewater to the Kiski Valley sewage treatment plant, which itself discharged into the Kiski River. ALC's West Leechburg plant discharges directly into the Kiski River. The Brackenridge plant discharges into the Allegheny River.

This case was filed in June 1995. The government's claims are divided into three categories. The first is reported claims, or claims that arise out of reports of monitoring that ALC is obligated under the Act to prepare and submit to state and federal environmental authorities. The second category is interference claims, or claims that arise out of problems with discharges that ALC sent to the Kiski Valley sewer plant, and which interfered with the sewer plant's ability to comply with its own environmental obligations. The third type is unreported claims, or claims that arise out of the government's own investigation of ALC's failure to comply with the Act.

After two amended complaints and a lengthy period of pretrial preparation, the court decided cross-motions for summary judgment. By decision dated September 28, 2000, the court denied each party's summary judgment motion with respect to the unreported and interference claims. Doc. No. 216 (reported at United States v. Allegheny Ludlum Corporation, 118 F. Supp.2d 615 (W.D.Pa. 2000)). The court also rejected certain ALC defenses to liability on reported claims and entered summary judgment for 832 violations in favor of the United States. ALC admitted liability to 119 violations. See Stipulation Concerning Claims of Reported Violations, Doc. No. 215.

The court conducted a jury trial on liability from January 5 to February 2, 2001. During trial, the court granted the United States['] motion for judgment as a matter of law on ALC[']s affirmative defense of upset relating to the Vandergrift Facility, involving 165 violations. The jury returned a verdict in favor of ALC on all the interference and unreported claims. The jury also returned a verdict for ALC on 6 of the 12 reported claims relating to the Brackenridge and West Leechburg Facilities, and in favor of the United States on the other 6 claims. ALC thus has been found liable for 1,122 days of violations of the Act at its Vandergrift, Brackenridge and West Leechburg plants during the period from July 1990 through February 1997. Plaintiffs Exhibit P-1 and P-1A.*fn1

After the jury verdict on liability, the Court conducted a non-jury penalty trial, from February 5 to 8, 2001. Testimony by experts at this phase of the trial was submitted by written proffer with live cross-examination.

The assessment of civil penalties for these violations as sought by the United States is governed by 33 U.S.C. § 1319(d). Section 1319(d) provides that the violator of a permit issued pursuant to the Act shall be subject to a civil penalty not to exceed $25,000 per day for each violation. This penalty provision further states that in assessing the penalty, the court shall consider the following factors:

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.

33 U.S.C. § 1319(d).

It should be noted that, in addition to the 1,122 days of violations for which defendant has been found liable in this case, ALC settled an additional 990 days of violation with the Pennsylvania Department of Environmental Protection ("PaDEP") in consent decrees signed in 1992 and 1993. Plaintiffs Exhibit P-2 and P-3. As explained below, these violations may properly be considered in the court's penalty calculations.

This decision constitutes the Court's findings of fact and conclusions of law based on evidence from both the liability and penalty trials. It is drawn largely from proposed decisions submitted by the parties.

II. Penalty Factors

A. The Seriousness of the Violations

The United States Court of Appeals for the Third Circuit approved a formula for assessing the seriousness of Clean Water Act violations that accounted for the number of violations, the amount that discharges exceeded permit limits, and the toxicity of pollutants discharged. Public Interest Research Group of New Jersey, Inc. v. Powell Duffryn Terminals, Inc., 913 F.2d 64, 79 (3d Cir. 1990) A sister court in this circuit applied similar standards in examining the number, frequency, and degree of the violations in a highly relevant case. United States v. Municipal Auth. of Union Twp., 929 F. Supp. 800, 807 (M.D.Pa. 1996), aff'd on other grounds, 150 F.3d 259 (3d Cir. 1998) (each referred to as "Dean Dairy").

With regard to the number of violations, 386 violations over a seven year period was considered a large number by the Third Circuit in Powell Duffryn — a number reached, incidentally, after the public interest plaintiffs waived review of whether the district court undercounted violations by listing violations of the monthly average limit for discharges as one offense rather than thirty, 913 F.2d at 79 n. 29. For the sake of comparison, the district court in Dean Dairy found that the permittee committed a total of 2,360 violations over six years, a number the court characterized as "very large." 929 F. Supp. at 807. ALC has been found liable for 1,122 days of violation over the course of about six and a half years. This is a substantial number and frequency of violations.

With regard to the magnitude of the violations and their toxicity, these cases provide useful reference points. The vast majority of the 2,360 days of violation in Dean Dairy were violations of the discharge limits on conventional pollutants in defendant Fairmont's discharge permit to the local treatment plant. Dean Dairy, 929 F. Supp. at 803. These conventional pollutants, known as total suspended solids ("TSS") and biological oxygen demand ("BOD"),*fn2 were produced by the daily cleaning of the equipment used to make sour cream, cottage cheese, yogurt, and ice cream. Dean Dairy, 929 F. Supp. at 807-808. By contrast, many of ALC's violations involve toxic pollutants, not conventional pollutants such as TSS and BOD. Toxic pollutants generally pose a greater threat to human life. Id. In Powell Duffryn, the district court found 10 violations of toxic pollutant limits to be serious, 913 F.2d at 79. Here, the court has found ALC liable for 893 days of violations of toxic pollutant limits.

Furthermore, the district court and the Third Circuit found in Powell Duffryn that the magnitude by which the defendant exceeded its permit limits also made its violations serious. Powell Duffryn, 913 F.2d at 79; Powell Duffryn, 720 F. Supp. at 1161. In the current case, ALC exceeded its permit limits by at least 1,000% for 180 days, as compared to 86 such days found by the Court in Powell Duffryn, 720 F. Supp. at 1161. In February 1993, ALC exceeded its monthly average chromium limit by more than 4,000%. Plaintiffs Exhibit P-1A.

ALC's environmental conduct has reached other extremes. One notorious ALC oil spill, on July 1, 1994, spread from West Leechburg nearly 30 miles downstream to the Point at Pittsburgh. The U.S. Coast Guard followed the oil sheen by helicopter from the Point up the Allegheny, and traced it to the West Leechburg facility on the Kiski River. Trial Transcript for 2/6/2001, Doc. No. 320, at 10. PaDEP and the Coast Guard estimated that the oil must have been flowing for nearly a day to have reached that far downstream. Trial Transcript for 2/5/2001, Doc. No, 319, at 145. When the Coast Guard arrived, ALC was unaware of the spill and had failed to install containment booms or to report it. Even though the spill was miles long, and ALC was told by the Coast Guard about the spill, ALC eventually reported the spill as a "small quantity of water containing oil" being discharged. Plaintiffs Exhibit P-24.

Moreover, there is persuasive evidence that ALC's violations likely caused harm to the river. We should first note that the government has not shown actual harm from ALC's discharges. In recognition of the difficulty of proving harm where the violation is usually temporally distant from the penalty, however, and the science is incomplete, a particularized showing of actual harm is not necessary. "[B]ecause actual harm to the environment is by nature difficult and sometimes impossible to demonstrate, it need not be proven to establish that substantial penalties are appropriate in a Clean Water Act case." Dean Dairy, 929 F. Supp. at 807. A court may impose a significant penalty if it finds there is a risk or potential risk of environmental harm, even absent proof of actual deleterious effect. United States v. Smithfield Foods, Inc., 972 F. Supp. 338, 344 (E.D.Va. 1997), aff'd in part, rev'd in part, 191 F.3d 516 (4th Cir. 1999), cert. denied, 531 U.S. 813, 121 S.Ct. 46, 148 L.Ed.2d 16 (2000);*fn3 Texaco, 800 F. Supp. at 24 (penalties permissible where potentially destructive environmental impact). In Powell Duffryn, the Third Circuit upheld the district court's finding that the defendant's violations were serious, even absent a showing of actual harm linked to the defendant's discharges.

The government called as its expert in aquatic toxicology Dr. Jerome Diamond, who specializes in studies of fresh water rivers and streams. He stated that the toxic metals in the violations in this case are designated as priority pollutants, similar to the pollutants given weight by the court in Powell Duffryn, including chromium, copper, zinc and nickel. Diamond Proffer at 6. The record shows that the metals discharged by ALC can be toxic in small concentrations of only parts per billion, although ALC released toxic discharges of chromium on eight occasions in concentrations of parts per million. Dr. Diamond stated that ALC's closely spaced outfalls, the multiple and recurring violations within a relatively short time frame, and the synergistic effect of metals and pH violations, all combined to pose multiple stresses, the cumulative effect of which were more difficult for aquatic life to withstand.*fn4

ALC's expert, Dr. Lawrence Barnthouse, does not directly disagree with the documented scientific literature, but contends instead that the data are incomplete, and that no definitive conclusion can be reached concerning whether the anticipated effects occurred as a result of ALC's violations. Dr. Barnthouse does not analyze the toxicological properties of the pollutants, but instead looks at the mass loading of ALC's discharges of metals, TSS, and oil and grease over nine years, relative to the full load allowed by its permit limits. Barnthouse Proffer at 3; Figure 3. Dr. Barnthouse's analysis downplays the high concentration violations by averaging them with low concentration discharges over many years. The court finds persuasive Dr. Diamond's response that this analysis overlooks the likely toxicological effect of ALC's violations; it is analogous to arguing that consuming five gallons of alcohol in a single day is not harmful because on average the daily consumption over seven years is within acceptable limits. Diamond Proffer at 15.

B. History of the Violations And Good Faith Efforts to Comply.

Two statutory penalty factors, the defendant's "history of violations" and its "good-faith efforts to comply," appropriately may be considered together because they combine the problems the Act addresses with the defendant's reaction to these problems.

1. History of Violations

ALC's 1,122 days of Clean Water Act violations span the years 1990-1997. See Plaintiffs Exhibit P-1. Seven years is comparable to the time spans of violations in other cases where district courts have imposed significant civil penalties under the Act. See, e.g., Powell Duffryn, 913 F.2d at 68 (six years); Smithfield, 972 F. Supp. at 349 (six years); Dean Dairy, 929 F. Supp. at 807 (six years).

In addition, ALC's history of violations extends back at least to the 1980's. As found above, ALC settled almost a thousand Clean Water Act violations with PaDEP in administrative actions. The court considers pollution incidents reported by PaDEP inspectors but not included in the allegations in this case, and the violations resolved by PaDEP consent orders, to fall within the broad range of information available for assessing ALC's history of Clean Water Act violations. See Smithfield, 972 F. Supp. at 349; Dean Dairy, 929 F. Supp. at 807. If we are to consider "any history of violations," as the Act requires, there is no sound reason to exclude any ...

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