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United States v. The Municipal Authority of Union Township

150 F.3d 259 (1998)

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United States v. The Municipal Authority of Union Township

United States Court of Appeals for the Third Circuit

150 F.3d 259 (1998)

Facts

Dean Dairy Products, Inc. (Dean Dairy) (defendant) operated as a milk processor in Union Township, Belleville, Pennsylvania (defendant). Beginning in July 1989, Dean Dairy violated the Clean Water Act (CWA) by discharging wastewater that contained impermissibly high levels of pollutants and caused damage to the nearby Kishacoquillas Creek. In 1994, the United States (plaintiff) filed a civil enforcement action against Dean Dairy for close to 1,800 CWA violations. The district court found Dean Dairy liable for 1,754 violations between 1989 and 1994 and held that Dean Dairy had continued to violate the CWA after the United States filed suit. Dean Dairy had considered undertaking various options to comply with the CWA, including dropping PennMaid as a customer, but chose not to reduce production volume because it would have caused a loss in earnings. The statutory penalty of $25,000 per each day of violation would have resulted in a maximum penalty of $45,825,000. Instead, in determining the amount of the civil penalty to impose on Dean Dairy, the district court analyzed factors including the economic benefit to Dean Dairy resulting from the violation. Although polluters typically realize an economic benefit from avoiding compliance, the court acknowledged that Dean Dairy was losing money during its period of noncompliance because it had to pay higher usage fees to the township’s publicly owned treatment works (POTW) for its increased wastewater-discharge volume. Even though Dean Dairy did not save money by delaying its compliance, the district court held that Dean Dairy still realized an economic benefit because it was able to engage in production at a volume above that which would have been permitted. The court relied on Dean Dairy’s estimate of the revenues that would have been lost by dropping PennMaid as a customer and reducing emissions to come into compliance with the CWA. The estimated loss of earnings from dropping PennMaid was $417,000 in 1994. The court used this figure to determine that Dean Dairy gained approximately $2,015,500 between 1989 and 1994 by violating the CWA. The court doubled the figure and imposed a total penalty of $4,031,000 to provide for proper deterrence and punishment. Dean Dairy appealed the penalty.

Rule of Law

Issue

Holding and Reasoning (Sloviter, J.)

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