United States v. R.M. Packer Company, Inc.

          MEMORANDUM OF DECISION

          DENISE J. CASPER UNITED STATES DISTRICT JUDGE

         I. Introduction

         Having found liability against Defendants R.M. Packer Co., Inc., (“R.M. Packer”) and Tisbury Towing and Transportation (“Tisbury Towing”) (collectively, “Defendants”) on claims pursuant to the Clean Air Act, 42 U.S.C. § 7413(b) and on claims against R.M. Packer pursuant to the Clean Water Act, 33 U.S.C. §1319(b), D. 55, the Court now turns to the civil penalties and injunctive relief that Plaintiff (“United States” or “the government”) now seeks. D. 74-75, 78. After a bench trial over the course of four days and having considered the filings and arguments of the parties, the Court makes the following findings of fact and conclusions of law, incorporating its summary of same in the excerpt of transcript attached hereto.

         II. Legal Standard

         To determine the appropriate penalties for Clean Air Act and Clean Water Act violations, the parties agree that the Court should adopt a “bottom-up” approach. D. 75 at 21; D. 77 at 11. Under this approach, the analysis begins with the economic benefit, if any, that the failure to comply gave the Defendants and then the Court considers the other penalty factors to adjust the figure upward so that the penalty constitutes both punishment for non-compliance and deterrence of any future violations. See United States v. Citgo Petroleum Corp., 723 F.3d 547, 552 (5^th Cir. 2013) (internal citation omitted); Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 890 F.Supp. 470, 492 (D.S.C. 1995).

         Under both the Clean Air Act and the Clean Water Act, the other factors for the Court to consider include the Defendants' compliance history and history of violations, the duration of such violations, any good faith efforts to comply, the seriousness of the violations, the size of the business and the economic impact of any penalty on the business. 42 U.S.C. § 7413(e); 33 U.S.C. § 1319(d); see D. 75 at 22-23 and cases cited.

         III. Discussion

         A. Civil Penalties

         The Court having already found liability as to both R.M. Packer and Tisbury Towing, the Court will not repeat its factual findings as to same or the incidents of non-compliance that supported those findings, but incorporates its prior Memorandum and Order, D. 55, here. Having considered the evidence as to the relevant penalty factors during the course of the trial, the Court now turns to address each factor. As an initial matter, the Court notes that much of the factual presentation by the government, both from percipient witnesses and expert witnesses, was largely undisputed. Where there were disputes of fact, the Court has addressed them below.

         1. Economic Benefit to Non-Compliance

         Based upon the unrefuted and persuasive analysis present by Dr. Joan Meyer, an economist, there was an economic benefit to R.M. Packer for its non-compliance with Clean Water Act and Clean Air violations. (Any such benefit to Tisbury Towing was negligible so the government does not press the same argument as to Tisbury Towing, but given the common ownership and operation of the Defendants, the Court has considered this economic benefit in its bottom-up approach as to both). Relying upon information from Jonathan Jones (who testified about, among other things, the reasonable costs of stormwater compliance) and Clement Mesavage (who testified about, among other things, the reasonable costs of air pollution compliance), publicly available records, adjusting for inflation, taxes and depreciation, and subtracting the actual costs of R.M. Packer's compliance efforts from the reasonably estimated costs of full compliance, Dr. Meyer opined that the economic benefit to R.M. Packer of non-compliance was between $84, 762 and $110, 567. Exh. 293; Meyer testimony. Although Defendants dispute their ability to pay the civil penalty that the government seeks (as discussed below), they presented no evidence disputing that R.M. Packer reaped an economic benefit from failing to comply with the law and this Court finds that it did so at the upper level of Dr. Meyer's range ($110, 567) given the scope and duration of that non-compliance as discussed further below. Accordingly, any penalty should exceed this figure so as to serve as both punishment and deterrence for Defendants. Citgo Petroleum Corp., 723 F.3d at 552.

         2. Defendants' History of Non-Compliance

         Chief among the undisputed matters at the bench trial was that R.M. Packer's non-compliance with Clean Air Act and Clean Water Act regulations and Tisbury Towing's non-compliance with Clean Air Act regulations have been ongoing for some time. As to Tisbury Towing, just considering non-compliance with the Clean Air Act violations alleged in this action, its failure to conduct loading events in a vapor tight vessel extends back until November 2011 and spans several years. Exh. 290 at 2; Kudarauskas testimony. The same is true as to its failure to submit an emission control plan, which extends back to April 2010, pursuant to a tolling agreement, and also spans several years. Exh. 290 at 1, 3; Kudarauskas testimony. Similarly, just the multiple (and, in some cases, continuous) instances of non-compliance with both the Clean Air Act and Clean Water Act charged in this case have occurred over the course of years, and as indicated by several witnesses, continue through the present. Exh. 288; Exh. 289; Kudarauskas testimony; Canzano testimony.

         Moreover, even before the violations giving rise to this civil action, the EPA had issued a notice of violation and compliance order to R.M. Packer in 2002 for not having a VRU in operation in 1999. D. 75 at 7. As a result, the business was required to make such installation and install the appropriate system. Id. Given that many of the claims in the present case arise out of the failure to maintain and inspect that same system, it is appropriate for the Court to consider that this ...