United States
                        Environmental Protection
                        Agency
                Office of Enforcement and
                Compliance Assurance
                (2201A)
        EPA 300-R-9-005
        April 1999
            Water  Enforcement Bulletin
Issue 15
Water Enforcement Division
           April 1999
Eric V. Schaeffer
Director, Office of
Regulatory Enforcement
  Brian J. Maas
  Director, Water
  Enforcement Division
Editor: Joseph G. Theis
(202) 564-4053
Theis.Joseph@epa.gov
        An Update of Cases Relating to Water Enforcement
          October 1997  - September 1998
                       Cases  in  Review
                             In This Issue
            Fourth Circuit, in upholding criminal convictions, holds that
            discharges of pollutants to public sewers that flow to waters
            of the U.S. are subject to CWA: U.S. v. Hartsell  	
            Third Circuit affirms district court's use of wrongful profits approach
            to calculating economic benefit factor of CWA penalty and finds no
            error in considering parent companies finances to determine impact
            of penalty on violator: U.S. v. Municipal Authority of Union Township
                                    39
            Tenth Circuit holds that injunctive relief is not a penalty for purposes
            of 28 U.S.C. § 2462 and that the concurrent remedy rule does not
            bar the government's claim for equitable relief: U.S. v. Telluride Co. . 41
           This publication can be found on the Internet at http://www.epa.gov/oeca/ore/water/waterbull.html
      Recycle / Recyclable. Printed with Soy/Canola Ink on paper that contains at least 30% recycled fiber.

-------
 Issue 15                             Water Enforcement Division                           April 1999
                                     TABLE OF CONTENTS

I.   Clean Water Act (CWA)	  1
    A.  Jurisdictional Scope of the CWA	  1
        1.   Fourth Circuit, in upholding criminal convictions, holds that discharges of pollutants to public
            sewers that flow to waters of the U.S. are subject to CWA:  U.S. v. Hartsell  	  1
        2.   Ninth Circuit holds that where a proposed solid waste landfill requires the filling of wetlands, the
            EPA or an approved state solid waste program has jurisdiction under RCRA and that the USAGE
            lacks jurisdiction to regulate such activity under the CWA:  Resource Investment v. Corps of
            Engineers	  1
        3.   District court holds that CWA does not protect against contamination of groundwater:  Allegany
            Environmental Action v. Westinghouse Electrical Corp.	  2
        4.   District court holds that an allegation that a discharge of pollutants entered ground water
            connected to surface water is  sufficient to overcome a motion to dismiss for failure to state a
            claim: Mutual Life Insurance Co. v. Mobil Corp.	  2
        5.   District court holds that it lacks subject matter jurisdiction over discharges to surface water via
            groundwater: U.S. v. ConAgra. Inc.	  3
    B.  Discharge of Pollutants/Point Sources	  5
        1.   Third Circuit holds that the unpermitted discharge of sections of a dilapidated barge and sand
            and paint chips into navigable waters constitute discharges of pollutants in violation of the  CWA:
            U.S. v. West Indies Transport. Inc.	  5
        2.   Third Circuit holds that uranium mill tailings are not  "pollutants" for purposes of the CWA:
            Waste Action Project v. Dawn Mining Corp.	  6
        3.   Ninth Circuit holds that the term "point source" does not include any animal: Oregon Natural
            Desert Association v.  Dombeck	  6
        4.   District court holds the City of Atlanta discharged improperly treated  CSO wastewater in
            violation of the CWA:  Upper Chattahoochee Riverkeeper Fund. Inc.. et al.. v.  City of Atlanta  ....  7
    C.  State/Tribe Water Quality Standards	  8
        1.   Third Circuit upholds EPA's  "treatment as a state" regulation (40 C.F.R. § 131.8(b)(3)) and
            upholds application of tribal water standards to non-consenting, non-tribal members: Montana v.
            U.S. Environmental Protection Agency 	  8
        2.   D.C. Circuit  holds that 40 C.F.R. §  131.20(c) does not impose a mandatory duty on EPA to
            approve water quality standards that a State left unchanged following its triennial review:
            National Wildlife Federation  v. Browner	  9
        3.   District court holds that State  law that suspends enforcement of narrative nutrient water quality
            standards altered State  water quality standards sufficiently to trigger EPA duty to review revised
            standards and approve or disapprove of such standards: Miccosukee Tribe v. United States 	  10
    D.  NPDES Permits 	  11
        1.   Fifth Circuit  holds that EPA lacks authority to require Louisiana to consult with FWS and NMFS
            as a precondition for becoming authorized to administer the NPDES program:  American Forest
            & Paper Ass'nv. U.S. EPA	  11
        2.   Eighth Circuit holds that City of Glasgow's discharge of pollutants from a drinking water
            treatment facility without a NPDES permit violates CWA, and remands for determination of
            whether enhanced permit fees violate State Constitution:  State of Missouri v. City of Glasgow ...  12
        3.   Ninth Circuit remands alleged NPDES permit violation for discharges from storm drain not
            owned by defendant to determine whether defendant  could be liable as operator of the drain: San
            Francisco Baykeeper v. City of Saratoga 	  13

-------
Issue 15                             Water Enforcement Division                           April 1999
       4.  EAB holds that municipal storm water permits do not need to include numeric effluent
          limitations where development of such limitations was infeasible and the permits included best
          management practices (BMPs) designed to reduce the discharge of pollutants to the "maximum
          extent possible" (MEP) as well as compliance with state water quality standards: In re:  Arizona
          Municipal Storm	  14
       5.  EAB holds that a NPDES permit provides "shield" against liability for discharge of pollutants
          not listed in the permit only when permit applicant has made adequate disclosures during the
          application process about the nature of its discharges: In re: Ketchikan Pulp Company	  15
   E.  State Certification  	  15
       1.  Second Circuit holds that FERC must include in its licenses all conditions imposed by a State
          under its § 401 certification: American Rivers v. Federal Energy Regulatory Commission	  15
       2.  Ninth Circuit holds that certification is required only where a discharge is present:  Citizens
          Interested In Bull Run v. R.L.K. & Co.  	  16
       3.  Ninth Circuit holds that the term "discharge" as used in CWA  § 1341 is limited to discharges
          from point sources and does not encompass nonpoint source pollution and that, therefore, no
          State certification is required for the issuance of cattle grazing permits: Oregon Natural Desert
          Association v. Dombeck	  17
   F.  Section 404/Wetlands  	  17
       1.  Federal Circuit holds that takings claim accrued upon denial of permit and is thus barred by six-
          year statute of limitations:  Bayou Des Families Development Co. v. United States	  17
       2.  Federal Circuit holds that withdraw of § 404 permit application from active status based on the
          appellant's failure to complete a valid WQC application did not constitute a final decision by the
          USAGE:  Heck and Assoc.. Inc. v. United States	  18
       3.  Fourth Circuit upholds denial of CWA § 404 permit where detrimental environmental impacts of
          the fill project outweigh its benefits:  B & B Partnership v. United States  	  19
       4.  Fourth Circuit holds that portion of USAGE regulations which define waters of the U.S. to
          include those waters whose degradation "could affect" interstate commerce exceeds its authority
          under the Clean Water Act and the regulation is invalid: U.S. v. Wilson	  20
       5.  B.C. Circuit affirms rejection of Tulloch Rule: National Mining Association v. U.S. Army Corps
          of Engineers  	  21
       6.  District court enjoins USAGE from accepting preconstruction notices pursuant to NWP 29 after
          June 30, 1998, pending compliance withNEPA:  Alaska Center for the Environment v. West  ....  22
       7.  District court holds that slip plowing and disking of delineated wetlands required § 404 permit:
          Borden Ranch Partnership v. U.S. Army Corps of Engineers 	  23
       8.  District court holds that USAGE has authority to  delegate § 404 permit issuance authority to
          district engineers: Johnson v. U.S. Army Corps of Engineers	  24
       9.  District court denies plaintiffs summary judgment motion alleging USAGE improperly granted
          City of Bessemer a permit for dredge and fill activities in violation of the CWA, USAGE
          regulations, and other statutory requirements: Water Works and Sewer Board City of
          Birmingham v. U.S. Army Corps of Engineers  	  24
       10. District court holds that soil redeposited through  "incidental fallback" constitutes a discharge of
          a pollutant for purposes of the Clean Water Act:  U.S. v. Feinstein  	  26
       11. Court of Claims holds that wetlands determination and delineation themselves are insufficient to
          constitute a compensable taking under the Fifth Amendment:  Robbins v. The United States	26
       12. District court holds the U.S. Army Corps of Engineers has jurisdiction over isolated intrastate
          waters that provide a habitat for migratory birds even  if the particular birds on the site do not

-------
Issue 15                             Water Enforcement Division                           April 1999
          substantially affect interstate commerce:  Solid Waste Agency of Northern Cook County v. U.S.
          Army Corps of Engineers	  27
       13. District court reconsiders ruling on sidecasting in light of Wilson and holds sidecasting
          constitutes does not discharge for purposes of CWA:  U.S. v. Deaton  	  27
       14. District court holds that only EPA, not the USAGE, has statutory authority under the CWA to
          bring a civil enforcement action to enforce violations of § 404 where no § 404 permit has been
          issued:  U.S. v. Hallmark Construction Company  	  28
       15. District court holds that USAGE has authority under CWA to bring an enforcement action in
          instances of a permitless discharge of dredge and fill materials into waters of U.S., and sustains
          application of migratory bird rule to isolated intrastate wetlands: U.S. v. Hallmark Construction
          Company	  28
       16. District court holds that USAGE cancellation of application for coverage under nationwide § 404
          permit based on applicant's inaction and issuance of cease and desist order for potential
          CWA/RHA violations were not final agency actions under the APA:  Inn of Daphne. Inc.. v. The
          United States of America  	  29
       17. District court finds inadequate subject matter jurisdiction where plaintiff challenged USACE's
          authority to require a dredge and fill permit based on the fact that USAGE had delegated
          authority to issue such permits to the State of Michigan:  Charfoos and Co. v. West	  30
       18. District court upholds USACE's decision to allow coverage under nationwide permits where
          USAGE engaged in reasoned decision making and plaintiff failed to offer contradictory evidence
          other than expert testimony:  Mylith Park Lot Owners Assoc. v. U.S. Environmental Protection
          Agency  	  31
       19. Court of Claims holds that under ripeness doctrine plaintiffs takings claim accrued for purposes
          of applying the statute of limitations when permit application was denied on the merits and in
          such manner as to suggest further efforts would be futile: Cristina Investment Corp. v. United
          States	  32
   G.  Citizen Suits	  33
       1.  Jurisdiction 	  33
          a. District court holds that EPA has no mandatory duty to oppose a  State's CAFO environmental
             strategy that may not be fully consistent with CWA requirements where application of the
             strategy has not been shown to result in a violation of CWA  standards or orders, nor has the
             strategy been shown to  effectuate a change in water quality standards:  Cross Timbers
             Concerned Citizens v. Jane Saginaw. Regional Administrator. U.S. EPA. Region IV: and Paul
             Johnson. Chief. U.S.  Department of Agriculture	  33
          b. District court holds USAGE is not a proper defendant for an action under CWA §505(a)(l):
              Stewart v. Potts. U.S. Army Corps of Engineers  	  33
          c. District court holds that exercise of EPA Adminstrator's authority to investigate citizen
             complaints and to make findings relative to these complaints is discretionary, not mandatory:
             Weatherbv Lake Improvement Company v. Browner	  34
          d. District court holds that plaintiffs' citizen suit seeking civil penalties was moot where
             injunctive relief had been granted and no  continuing violations were alleged, since civil
             penalty would not redress plaintiffs injury: Roland Dubois  v. U.S. Department of
             Agriculture	  35
       2.  Standing	  35
          a. Fifth Circuit holds that, in determining whether non-profit corporation has members that
             could assert standing for purposes of establishing organization's associational standing,
                                                 in

-------
Issue 15                             Water Enforcement Division                           April 1999
             formal membership is not controlling where there is sufficient "indicia of membership":
             Friends of the Earth v. Chevron Chemical  	  35
          b. Tenth Circuit holds that plaintiff lacks standing to challenge endangered species consultation
             requirements within EPA's authorization of Oklahoma's NPDES program because such
             requirements only apply to sensitive waters and plaintiff failed to allege members discharge to
             or intend to discharge to such waters:  American Forest & Paper Ass'n v. U.S. EPA	  36
       3.  Enforcement Under Comparable Law as Bar to Citizen Suit 	  37
          a. Eighth Circuit holds that administrative enforcement agreement between State environmental
             agency and polluter precludes pending citizen suit seeking civil penalties where such
             agreement is the result of a diligently prosecuted enforcement process: Comfort Lake Assoc.
             v. Dresel Contracting. Inc.	  37
       4.  Injunctive Relief  	  38
          a. District court finds inadequate basis to issue permanent injunction where there is no proof of
             irreparable harm occurring due to violations of flow volume permit limits:  Coalition for a
             Livable West Side v.  NYC PEP 	  38
   H.  Administrative Practice  	  39
       1.  ALJ holds that prehearing settlement of administrative action must be reduced to writing and that
          only the Regional Administrator, not an EPA attorney, can bind Agency in settlement: In the
          Matter of: Indoor Air Quality  	  39
   I.   Enforcement Actions/Liabilities/Penalties  	  39
       1.  Third Circuit affirms district court's use of wrongful profits approach to calculating economic
          benefit factor of CWA penalty, and finds no error in considering parent companies finances to
          determine impact of penalty on violator: U.S. v. Municipal Authority of Union Township	  39
       2.  Seventh Circuit holds stipulated daily penalty in consent decree was properly enforced:  U.S. v.
          Krillich  	  40
       3.  Tenth Circuit holds that  injunctive relief is not a penalty for purposes of 28 U.S.C. § 2462  and
          that the concurrent remedy rule does not bar the government's  claim for equitable relief: U.S. v.
          Telluride Co.	  41
       4.  District court holds that, in the absence of permit language subjecting the permittee to statutory
          changes, the permit's penalty language must control in assessing civil penalties:  U.S. v.
          ConAgra. Inc.  	  42
       5.  District court uses "bottom-up" method to calculate civil penalty of $ 12,600,000 for violations  of
          CWA: U.S. v. Smithfield Foods. Inc. 	  42
       6.  District court holds that civil penalties recovered as a result of enforcement actions brought by
          the government under the CWA must be paid into the U.S. Treasury:  U.S. v. Smithfield Foods.
          Inc.	  43
       7.  District court imposes a  civil penalty of $1,500,000 for discharging pollutants without a NPDES
          permit over a 12-year period where the violation was both serious and prolonged but the
          defendants'ability to pay justified some mitigation of the penalty:  U.S. v. Gulf Park Water Co. ..  43
       8.  EAB upholds ALJ  penalty assessment on grounds that failure to challenge a State-issued permit
          in a timely manner precludes raising objections years later in an enforcement proceeding:  In re:
          General Motors Corporation	  44
       9.  EAB holds that discharge of sludge removed from treated wastewater and returned to aeration
          basin to continue cycle of treatment, violated permit prohibition on discharge of sludge removed
          from wastewater during the course of wastewater treatment: In re: Ketchikan Pulp Company  ...  45
                                                 IV

-------
 Issue 15                             Water Enforcement Division                          April 1999
        10. ALJ imposes statutory maximum penalty of $125,000 where estimate of economic benefit was
           adjusted to exclude period barred by statute of limitations: In the Matter of: B.J. Carney
           Industries. Inc.	 45
        11. ALJ holds that respondent's activities following purchase of oil facility constituted a substantial
           continuation of activity that supported imposing successor liability: In the Matter of: Heating
           Oil Partners	 46
    J.  Criminal Cases	 47
        1.  Fourth Circuit holds that to establish a criminal violation of the CWA the government must prove
           defendant's knowledge of facts meeting each essential element of the substantive offense: U.S.
           v. Wilson	 47
    K.  Section 311 (Oil and Hazardous Substance Liability)	 47
        1.  ALJ holds prior spill obligates facility to develop SPCC plan: In the Matter of:  Philadelphia
           Macaroni Co.	 47

II. Other Statutes	 48
    A.  SDWA	 48
        1.  Fourth Circuit holds that EPA order, mandating systematic groundwater sampling and providing
           bottled water to those with contaminated well water, constitutes a permissible exercise of EPA's
           emergency statutory powers:  Trinity American Corp. v. U.S. EPA  	 48
        2.  EAB rejects challenges to UIC permits:  In re: NE Hub Partners	 49
    B.  RCRA 	 50
        1.  Ninth Circuit holds RCRA does not authorize citizen suits based on State Subtitle D standards
           that are more stringent than the minimum federal criteria: Ashoff v. City of Ukiah  	 50
        2.  District court denies motion to dismiss, finding that where hazardous waste remains on-site, the
           failure to properly close a hazardous waste facility may constitute a continuing violation:
           Cornerstone Realty. Inc. v. Dresser-Rand Company and Ingersoll-Rand Company 	 51
        3.  District court grants in part and denies in part motion for preliminary injunction with respect to
           RCRA claims, and denies motion with respect to CWA claim due to split of authority regarding
           whether the continuing migration of contaminated groundwater constitutes an ongoing violation:
           Wilson v. Amoco Corporation 	 51
        4.  District court holds that the leaching of hazardous waste into groundwater from hazardous waste
           contaminated soil constitutes the continuing disposal of hazardous waste: U.S. v. Power
           Engineering Co.  	 52
    C.  Paperwork Reduction Act 	 53
        1.  District court holds that Paperwork Reduction Act does not require an agency to obtain OMB
           approval for the agency to use information that is properly collected in new ways: Tozzi v. U.S.
           Environmental Protection Agency  	 53
        2.  ALJ holds that PRA defense may be raised after answer has been filed and, regarding certain
           RCRA BIF provisions, EPA failed to display an approved OMB control number in both the
           Federal Register and the C.F.R.: In the Matter of: Parke-Davis Division Warner-Lambert Co. ... 53
    D.  Freedom of Information Act (FOIA)	 54
        1.  District court holds that materials subject to FOIA request must be released where notes were not
           deliberative and did not concern enforcement matters and release of criminal files would not
           interfere with enforcement proceedings: Grine v. Coombs  	 54

-------
 Issue 15
Water Enforcement Division
ApriM999
E.  Oil Pollution Act (OPA)  	  55
        1.  Ninth Circuit holds State BAP oil spill regulations are not preempted by Federal laws, except for
           provisions addressing design and construction requirements, which are preempted: International
           Assoc. of Independent Tanker Owners v. Gary Locke	  55
        2.  B.C. Circuit upholds majority of NO A A rule implementing the OP A, adopts NOAA construction
           of portions of rule, and vacates two parts of the rule: General Electric Co. v. National Oceanic
           and Atmospheric Administration 	  56
    F.  EPCRA	  58
        1.  Supreme Court holds that where declarative and injunctive relief sought in citizen suit would not
           remedy respondent's alleged injuries associated with wholly past EPCRA violations, respondent
           lacked standing to maintain the suit and the courts lacked jurisdiction to hear the suit: Steel Co.
           v. Citizens for a Better Environment  	  58
        2.  ALJ holds that gravity-based portion of EPCRA penalty should be reduced 100 percent where all
           criteria of self-policing policy are satisfied, and that where the self-policing policy is inapplicable
           the ERP allows partial reduction: In the Matter of: Bollman Hat Company  	  59
        3.  ALJ holds that in calculating proposed penalty for EPCRA violation based on EPCRA ERP the
           Agency may not restrict application of adjustment factors contained in ERP to settlement only:
           In the Matter of: Catalina Yachts	  60
        4.  ALJ holds that failure to comply with EPCRA § 311 is a continuing violation not barred by the
           federal five-year statute of limitation, but that failure to comply with EPCRA § 312 is not a
           continuing violation and is not barred under the statute of limitation: In the Matter of: Mafix.
           Inc.	  60
    G.  Rivers and Harbors Act (RHA) 	  61
        1.  District court holds USAGE did not act  in an arbitrary or capricious manner when it found  that
           numerous houseboats constituted permanently moored floating vessels that required a permit
           under the RHA: U.S. v. Hernandez 	  61
    H.  Clean Air Act (CAA)	  62
        1.  Fourth Circuit holds that EPA's interpretation of its benzene fugitive emission NESHAP should
           be afforded deference, but that the small plant exemption provisions of the rule are insufficient to
           provide fair notice absent actual notice:  U.S. v. Hoechst Celenese Co.   	  62
                                                  VI

-------
Issue 15
Water Enforcement Division
ApriM999
                                             Disclaimer

The Water Enforcement Bulletin is intended primarily for the use of EPA employees. The summaries contained
in the Water Enforcement Bulletin do not represent an official Agency position with respect to matters in litigation,
nor are they intended to create any rights, duties or obligations, either implied or otherwise, in any third parties.
To make inquiries with regard to the Water Enforcement Bulletin please contact Joseph G. Theis (2243A), U.S.
EPA, 401  M Street, SW, Washington, DC 20460, (202) 564-4053, e-mail: theis.joseph@epa.gov.
                   Note:  The Water Enforcement Bulletin is available on the Internet at:
                              www .epa.gov/oeca/ore/water/waterbull .html.
                                                 vn

-------
 Issue 15
Water Enforcement Division
ApriM999
I.   Clean Water Act (CWA)

    A. Jurisdictional Scope of the CWA

       1.  Fourth Circuit, in upholding criminal
           convictions, holds that discharges
           of pollutants to public sewers that
           flow to waters of the U.S. are subject
           to CWA:

U.S. v. Hartsell. 127 F.3d 343  (4th  Cir. Mar.  11
1997).

Appellants, convicted for numerous violations of the
Clean Water Act (CWA), 33 U.S.C. § 1311 et seq.,
appeal  their  convictions  and sentences   on
approximately fifty separate assignments of error.
The court  specifically  confronted  the issue  of
whether  the  district court had subject  matter
jurisdiction  to conduct  the  initial trial.  The 4th
Circuit  Appellate  Court  denied   appellant's
contentions in affirming their convictions and
sentences in their entirety.

Appellants  argued that their  polluting  of  public
sewer systems is not included under the CWA's
realm of "navigable waters." The court cited both
the "plain language" of the CWA and its legislative
history as the two guiding factors in determining this
argument.   The court viewed the  definition  of
navigable waters as explained in the CWA, "waters
of the United  States," as being a purposely broad
concept  which treats  "navigable" with "limited
import." Furthermore, in determining Congresses
intent, the  court directly cites  from the CWA's
legislative history to allow "broad federal authority to
control pollution, for 'water moves in hydrological
cycles and it is essential that discharge of pollutants
be controlled  at its source.'" S.  Rep. No. 92-414,
pg. 77 (1972). The court concluded that both the
plain language and Congress had intended for
public sewer systems to be included in the
CWA's jurisdiction.

       2.  Ninth  Circuit  holds that  where  a
           proposed  solid   waste  landfill
           requires the filling of wetlands, the
           EPA or an approved  state  solid
                        waste  program  has  jurisdiction
                        under RCRA and that  the USAGE
                        lacks jurisdiction to regulate such
                        activity under the CWA:

              Resource Investment v. Corps of Engineers,  151
              F.3d 1162 (9th Cir. 1998).

              Plaintiff Resource Investments Inc., appealed the
              U.S. Army Corps of Engineers' (USAGE) denial of
              a §  404 permit for the filling of 21.6 acres of
              wetlands as part of construction of a  municipal
              landfill.  USAGE had found that plaintiff failed to
              demonstrate a lack of practicable alternatives  and
              that  the project was  not in  the  public interest
              because it  would degrade wetlands and cause
              groundwater contamination. The district court  had
              affirmed the USAGE'S denial of the permit.

              On   appeal, the  Ninth  Circuit reversed  and
              remanded,  holding that "when  a  proposed
              project affecting a wetlands  area is a solid
              waste landfill, the EPA (or the approved state
              program), rather than Corps, will have permit
              authority under RCRA."  The court reasoned  that
              solid  waste  did  not fall within  the  definition of
              dredged or fill material, and noted that EPA and the
              USAGE have recognized that pollutants discharged
              directly into  water primarily  for  the purpose of
              disposal were most appropriately regulated under
              the  NPDES program (i.e., § 402).  (See, 42 Fed.
              Reg. 37,122 (1977)). The court also found that the
              materials   used  to   construct  solid  waste
              landfills—the gravel, soil, and synthetic liners—were
              not fill material because their primary  purpose was
              not to replace any aquatic area with  dry land, but
              rather to serve as a leak detection and collection
              system. In addition, the court stated that the siting,
              design, and  construction of a solid waste landfill
              was specifically regulated under RCRA by EPA  and
              states with authorized solid waste permit programs.
              (See, 40 C.F.R. § 258.12(a)(1)-(4)).  The court
              observed that  the USAGE'S interpretation of its
              jurisdiction was unreasonable because it would
              result  in  "regulatory  overlap"  that  would   be
              inefficient and could result in inconsistent decisions
              and  policies.  The court noted that  USAGE  had
              expressed these very concerns in a  March, 1984

-------
 Issue 15
Water Enforcement Division
ApriM999
letter from the Assistance Secretary of the Army for
Civil Works to the Administrator of EPA, and had
entered into a 1986 MOU with EPA that provided
that once EPA  promulgated its  final  municipal
landfills rules (which occurred on October 9, 1991),
responsibility for implementing wetlands protection
with regard to solid waste disposal would be solely
the responsibility of EPA.  Finally, the court stated
that its decision would give effect to the relevant
provisions of both  RCRA and the CWA, ' "while
preserving their sense and purpose."'

       3. District court holds that CWA does
          not protect against contamination of
          groundwater:

Allegany Environmental Action v. Westinghouse
Electrical Corp.. 1998 U.S. Dist. LEXIS 1846 (W.D.
Pa. Jan 30, 1998).

Defendant NESCO, managed  and  operates a
government  laboratory in Pennsylvania.  Plaintiffs,
Allegany Environmental Action Coalition (AEAC),
filed a  claim  that alleged  the  emissions  and
discharges from the laboratory violated various
sections of the CWA, State Clean Streams Act, and
RCRA.  With regard to the  CWA violations, the
plaintiffs  claimed  that the  defendants illegally
dumped photographic wastes into a septic sewer
system for more than twenty years, which later
leaked into an adjacent hillside and into  a  lake.
Plaintiff AEAC claimed that with each rainfall that
toxic materials are released into the lake, therefore,
qualifying  as a continuing violation.   The  court
dismissed the Clean Streams and RCRA counts,
without prejudice, for not exhausting administrative
remedies and not citing state law, respectively.  The
Clean Water Act  claims were dismissed with
prejudice because the  claim was based  on
groundwater contamination.

In its decision, the court determined that the claim
was not viable because the CWA does not protect
against contamination of groundwater. Much of the
opinion, though, focused on the difference between
past violations involving hazardous materials and
non-hazardous   materials.    Citing  Fallowfield
Development Corp.  v.  Strunk,  1990  U.S.  Dist.
              LEXIS 4820 (E.D.  Pa. April 23, 1990), the  court
              noted that "if a person disposes of hazardous waste
              on  a parcel  of  property,  the hazardous waste
              remains on that  property insidiously infecting the
              soil and groundwater aquifers. In other words, the
              violation  continues  until  the  proper  disposal
              procedures are put into effect or the  hazardous
              waste is cleaned up." The court then  noted that
              Fallowfield included dicta which  distinguished the
              potential  harm from hazardous waste violations
              from  CWA violations, stating  that  if  "a person
              discharges  a pollutant in violation of an effluent
              limitation under the Clean  Water Act,  but comes
              into compliance prior to the suit, little is gained by
              allowing a citizen suit since the damage has  been
              done and is effectively irreversible."  The  court
              decided not to decide the  issue based on wholly
              past violations,  and  instead dismissed the  claim
              based on the groundwater contamination issue.

                     4.  District  court   holds   that    an
                         allegation  that  a  discharge  of
                         pollutants  entered  ground water
                         connected   to surface  water  is
                         sufficient to overcome a  motion to
                         dismiss for failure to state a claim:

              Mutual Life Insurance Co. v. Mobil Corp., 1988 U.S.
              Dist. LEXIS 4513 (N.D.N.Y. Mar. 31,  1998).

              Plaintiff Mutual Life of New York brought claims in
              November, 1996 against defendant Mobil underthe
              CWA and RCRA based on defendant's accidental
              release of 750 gallons of gasoline into a monitoring
              well and the alleged migration of that gasoline onto
              plaintiff's property.   Plaintiff also  alleged that
              equipment  failures  at defendant's  underground
              storage tank (UST) caused additional contamination
              during  October   1988,   January  1995,  and
              September 1995. Defendant moved to dismiss the
              complaint based on  its alleged  failure to state a
              claim.

              Defendant argued: 1) plaintiff's CWA claim failed as
              a matter of law because  plaintiff did  not allege
              defendant discharged pollutants into  "navigable
              waters"; 2) plaintiff's RCRA claim failed as a matter
              of law because plaintiff alleged only past incidents

-------
 Issue 15
Water Enforcement Division
ApriM999
of pollution;  3) both the CWA and  RCRA claims
were barred by the five-year statute of limitations in
28 U.S.C. § 2462; and 4) the federal court should
have abstained from hearing the case because a
case based on the same facts had been filed in
state court.

With regard to defendant's first argument, the court
acknowledged  that  it  was  unclear   whether
discharges of pollutants to ground water connected
to surface waters were subject to the CWA because
no circuit court of appeals had directly decided the
issue.  The court observed that several district
courts  had held "that the CWA does encompass
ground waters that are hydrologically connected to
regulated surface  waters."   Based on  these
decisions,  the  preliminary   stage  of  this
litigation, the broad interpretation of the term
"navigable waters"  under the CWA,  and  the
purpose of the CWA to protect the quality of
surface  waters,  the  court  held  that  the
allegation that the discharge entered  ground
water connected to surface water was sufficient
to state a CWA claim.

As  for  whether the  discharge  constituted   an
imminent  and  substantial  endangerment   as
required  under RCRA § 6972(a)(1)(B), the court
stated  '  "[a]s  long as  the  waste  has not been
cleaned up and the environmental damage has not
been  sufficiently  remedied, there  remains   an
ongoing RCRA violation.'" Frisco v. New York, 902
F. Supp. 374, 395 (S.D.N.Y. 1995).  The court
observed that where the CWA requires allegations
of continuous or  intermittent  pollution,  RCRA
requires    that    "the   effects    of
pollution—endangerment to human health or the
environment—be imminent and substantial." The
court found that at this stage it must accept the
alleged  allegations  of continued   pollution and
imminent and substantial endangerment to human
health as true.

The court also found that the plaintiff's allegation of
an  ongoing  RCRA violation was sufficient  to
preserve its  RCRA claim against any applicable
statute of limitation. With regard to plaintiff's CWA
claims, the court held that the five-year statute of
              limitations in 28 U.S.C. § 2462 applied to citizen
              enforcement actions under the CWA. The court
              held, however, that a CWA claim accrues not when
              the violations occur, but when citizen  plaintiffs
              discover them. Atlantic States Legal Found, v. Al
              Tech  Specialty  Steel  Corp. 635  F.  Supp. 287
              (N.D.N.Y.  1986).    The  court noted that in  the
              pending state court proceeding the  state court
              found that the earliest date on which plaintiff could
              have known of the spills was July 1991. The court
              found that the statute of limitations ran  only on
              those claims filed more than five years and 60 days
              from this date. (The court held that the statute of
              limitations was also tolled during the 60 day notice
              period.)

              Finally,  the  court  rejected  the  defendant's
              abstention argument.  The  court found that  the
              defendant had  failed  to demonstrate  that  the
              pendant state law  action had  the potential  to
              materially  impact  the federal  action.  The court
              stated that "abstention from the proper exercise of
              federal jurisdiction is 'the exception, not the rule',"
              and that  "'the mere potential for  conflict in  the
              results of  adjudications,  does not, without more,
              warrant staying  exercise  of federal jurisdiction."'
              The court granted defendant's motion only with
              regard to the subset of CWA claims filed more than
              5 years and 60 days from the date of discovery.

                     5.  District  court holds  that  it  lacks
                        subject  matter jurisdiction  over
                        discharges  to  surface  water  via
                        groundwater:

              U.S.v. ConAgra. Inc.. 1997 U.S. Dist. LEXIS 21401
              (D. Id. Dec. 31, 1997).

              ConAgra,  Inc., ("ConAgra") owns and operates a
              beef slaughter house and a  Concentrated Animal
              Feeding Operation ("CAFO") in Idaho. Consistent
              with these activities ConAgra operates an NPDES
              permitted wastewater treatment facility which treats
              waste from the slaughtering process and holds a
              CAFO permit for the feed lot.  Plaintiff United States
              ("U.S.") filed a complaint against ConAgra alleging,
              among other  acts, that ConAgra:  (i) discharged
              pollutants  not authorized by its NPDES permit; (ii)

-------
 Issue 15
Water Enforcement Division
ApriM999
discharged pollutants in excess of its permit limits;
and  (iii) failed to comply with NPDES monitoring,
reporting, and record keeping requirements.

The Court addressed a number of pre-trial motions
including:  defendant's motion  to dismiss claims
regarding   discharges   to  surface  water  via
groundwater for lack of subject matter jurisdiction;
various motions by the U.S. and ConAgra to strike
testimony and evidence; the U.S.' motion for partial
summary  judgment on  defendant's affirmative
defenses and on matters of liability; and ConAgra's
motion for partial summary judgment on the issue
of the amount of penalty to  be assessed and the
method of penalty calculation.

With respect to ConAgra's motion to dismiss the
claims regarding discharges to surface waters via
groundwater, the court undertook a review of the
opinion in Umatilla Water Quality Protective Assoc.,
Inc., v. Smith Frozen Foods, Inc., 962 F.Supp. 1312
(D.Or.  1997), and found itself in  agreement with
that court's position that discharges of pollutants to
groundwater are not subject to the CWA's NPDES
permit requirements even if the groundwater is
hydrologically connected to surface water.   In
support of its position the District Court cited to four
major issues relied  upon  by the Umatilla court in
reaching its decision and held that it did not have
jurisdiction over the discharges to the surface
water  of   Indian   Creek  via  groundwater.
Significantly,  the  court  deferred  for  trial  the
important issue of whether discharges to surface
waters via french drains are discharges from a point
source or discharges via groundwater.

Through a motion for partial summary judgment the
U.S.   sought liability  on issues  that  ConAgra
discharged pollutants into waters of the U.S. in
excess of effluent limits contained in its NPDES
permit and  that ConAgra failed to comply with the
monitoring,   record  keeping,   and   reporting
requirements of its NPDES permit. On the issues of
discharges in excess of permit limits and failure to
comply with the monitoring, record keeping, and
reporting requirements the court granted in full the
U.S.' motion for partial summary judgment. In total
the court found ConAgra liable for 632 violations of
              the CWA.   The court next  examined the U.S.'
              motion for summary judgment regarding ConAgra's
              affirmative  defenses.   In  reviewing defendant's
              assertion of an  upset defense the court  noted
              ConAgra's  reliance  upon the holding in Natural
              Resources Defense Council, Inc. v. EPA, 859 F.2d
              156(D.C. Cir. 1988).  In that case the Circuit Court
              held that EPA acted arbitrarily and capriciously in
              not extending the upset defense to water quality-
              based  limitations and  ordered  EPA to conduct
              proceedings to determine whether the defense
              should be  extended.   In  the  present case  the
              District Court held that inasmuch as EPA has not
              extended the  defense,  water  quality-based
              limits are not defensible with the upset defense.

              The court next reviewed ConAgra's claim that the
              penalty of $25,000 per day sought for each violation
              was contrary to  the  specific terms of its permit.
              ConAgra alleged that its permit, which was issued
              in  1985 and had  been administratively extended
              since 1990, specifically provided for civil penalties
              not to exceed $10,000 per day for each violation.
              Since the permit was  issued  prior to the 1987
              amendments to the CWA which increased the civil
              penalties to $25,000 per day for  each violation,
              ConAgra argued that the U.S. is bound by terms of
              the permit and should be prohibited from seeking
              the higher fine. The court agreed and held that in
              the absence of  any language  in the permit
              subjecting the permittee to statutory changes,
              the permit's penalty language must control in
              assessing civil penalties.

              Plaintiff sought to introduce evidence at trial related
              to 33 U.S.C. § 1319(d) factors in order to increase
              the amount of penalty that  could be assessed.  In
              opposition ConAgra  brought a motion in limine to
              exclude evidence regarding a history of violations
              and  economic  benefits (309(d)  factors)   which
              occurred  outside  the applicable  statute   of
              limitations.   The court took  note  of the  general
              application of the five year  statute of limitations of
              28 U.S.C. § 2462 to  CWA civil penalties and the
              determination by the court in Atlantic States Legal
              Foundation, Inc. v. Universal Tool & Stamping Co.,
              Inc.. 786 F.Supp. 743 (D.N.D. Ind.  1992), that the
              maximum  statutory  penalty   should  not  be

-------
 Issue 15
Water Enforcement Division
ApriM999
decreased because the defendant had a history of
violations.  However, the District Court noted that
while the court in Universal Tool did not mitigate the
maximum penalty because of a history of abuses
outside the statute of limitations period, it also did
not use the abuses to increase the penalty. On that
basis and  considering  other cases  addressing
penalty issues,  the  court  held  that  evidence
relating to the 309(d) factors will not include
evidence of allegations of  past violations  or
economic  benefit which  is alleged  to  have
occurred prior to the  statute  of limitations
period.

    B. Discharge of Pollutants/Point Sources

       1.  Third  Circuit   holds   that   the
           unpermitted discharge of sections of
           a dilapidated barge  and sand and
           paint  chips  into  navigable waters
           constitute discharges of pollutants
           in violation of the CWA:

U.S. v. West Indies Transport, Inc.,  127 F.3d 299
(SrdCir. 1997).

On appeal  from the District  Court  of  the Virgin
Islands, the 3rd Circuit  affirmed convictions and
sentences of the appellant, West Indies Transport,
for violations of the Clean Water Act, the Rivers and
Harbors Act, and various other crimes involving visa
fraud, conspiracy and racketeering. With regard to
the  environmental  crimes,   the  primary  issue
decided by the court was whether certain barge
management activities (e.g., severing and dropping
portions  of barges  into the  bay,  conducting
sandblasting  operations on   a  floating barge)
constituted  point source  discharges, as defined in
the Clean Water Act. In brief, the court held that
these activities were point source discharges, and
affirmed the lower court convictions.

Appellant owned  and operated a dry dock, ship
repair facility and barge towing company in  Krum
Bay, St.  Thomas.  In  1987, appellant obtained
permits to use  five barges as fixed docks for its
vessels.  Two years later, after a hurricane shifted
the barges from their permitted positions, appellant
              lashed the  barges together  and used  them  as
              docks,  repair  facilities  and  housing  for  their
              employees.   Appellant was  convicted  of  CWA
              violations for severing a damaged stern  from one
              the barges, sandblasting the hull of another vessel
              discharging   chips  and  sand   into  the   bay,
              discharging   untreated sewage  and  the  illegal
              dumping of  scrap metal at sea.   In  addition,
              appellants were convicted of several  Rivers and
              Harbors violations for the unapproved construction
              of structures  in waters of the U.S.

              On  appeal,  the  Third  Circuit  held  that  the
              appellant's barge salvage/maintenance activities did
              in fact result in the  discharge of "pollutants" (rebar,
              concrete, sand and paint  chips) into navigable
              waters of the U.S.  The court determined that the
              barges  were "floating craft" and not  "vessels"
              because of  the unsuitability of  the  barges for
              transportation.  This distinction was  used by the
              court to  define the barges as point  sources (33
              U.S.C. § 1362(14)) and to include the discharges of
              sewage as violations of § 1311 and§ 1316, and not
              § 1322.

              With regard to the Rivers and Harbors Act charges,
              the court discarded the appellant's contention that
              they did not "knowingly" build an obstruction to
              navigation,  by characterizing the intentional  act of
              attaching the barges together, building walkways
              and providing  electricity to the  barges  as  a
              "knowing"  construction  activity.     The  court
              discharged the appellant's entrapment by estoppel
              claim,  by holding  that  Coast Guard and  other
              private placards on board the barges that explained
              the ocean  dumping regulations  did  not relieve
              appellant of its legal responsibilities.

              A dissenting opinion questioned  the majority's
              broad  interpretation of "point sources", instead
              suggesting  that  the Appellant's  actions  were
              analogous  to the  Plaza  Health  intermittent and
              manual dumping of blood, which was held not be a
              point  source.     The   dissenting   judge   also
              characterized the Rivers and Harbors provision as
              requiring "knowing construction" and not "knowing
              use" of obstructions to navigation.

-------
 Issue 15
Water Enforcement Division
ApriM999
       2.  Third Circuit holds that uranium mill
           tailings are  not  "pollutants"  for
           purposes of the CWA:

Waste Action Project v. Dawn  Mining Corp., 137
F.3d 1426 (9th Cir. 1998).

Appellant Waste Action Project (WAP) alleged that
appellee, Dawn Mining, had discharged pollutants,
including uranium, silica,  heavy metals, sulfates,
phosphates, chlorides, and other chemicals, from
several tailings disposal areas (TDAs) into waters of
the U.S. without a  NPDES permit in violation of the
CWA.  The district court had  granted summary
judgement for  Dawn  Mining  having found that
uranium  mill tailings and associated wastes were
"byproduct materials" as defined in § 11 (e)(2) of the
Atomic Energy Act (AEA)  and,  thus, were not
"pollutants" as defined under the CWA.

The court observed that the appeal presented the
legal question of whether uranium mill tailings are
"pollutants" for purposes  of the  CWA's  NPDES
permit requirements. Appellants argued that the
AEA,  as  amended by the Uranium  Mill  Tailings
Radiation Control Act (UMTRCA) (1978), preserved
EPA's authority to regulate uranium mill tailings
under  the CWA because such tailings were not
expressly included in the AEA at the time the CWA
was enacted. The court disagreed and held that
uranium mill tailings are  not "pollutants" for
purposes of the CWA.

The court reasoned that even though uranium mill
tailings were not defined as "byproducts" under the
AEA when the CWA was enacted, the definition of
"byproducts" in the AEA was amended  in 1978 to
expressly include  such tailings.  The court noted
that EPA regulations exclude "byproduct materials"
as  defined in §  11(e)(2)  of the AEA from the
definition of pollutant under the CWA. (40 C. F. R. §
122.2).  In addition, the court  observed  that the
CWA legislative history makes it clear that although
the CWA defines "pollutant" to include radioactive
materials, such materials were only intended to
include those  radioactive materials  not included
within  the AEA definition  of the terms "source,
byproduct, or special nuclear materials." The court
              stated that the AEA vested exclusive authority to
              regulate these materials with what was then the
              Atomic Energy Commission (now the NRC) and
              that the adoption of the UMTRCA "did not alter the
              AEA's comprehensive regulatory scheme."  The
              court  observed  that UMTRCA  amended  the
              definition of "byproduct material" under the AEA to
              explicitly  include uranium mill tailings, which had
              previously been controlled through the  licensing
              process for uranium mills. The court recognized
              that UMTRCA did  provide EPA with authority to
              promulgate standards for uranium  tailings,  but
              pointed  out that the Act delegated authority to
              implement these standards to the NRC. The court
              stated that EPA has consistently interpreted  its
              regulatory authority under the CWA to exclude
              materials regulated  under the AEA.  Finally, the
              court cited the unanimous Supreme Court decision
              in  Train  v. Colorado Public  Interest Research
              Group. 426 U.S. 1  (1975), which held  that  "'the
              'pollutants' subject to regulation under the  [CWA]
              do not  include source,  byproduct,  and special
              nuclear  material,'"   as  supporting  this  decision
              through both its holding and reasoning.

                     3. Ninth  Circuit  holds that the term
                        "point source" does not include any
                        animal:

              Oregon  Natural Desert Association v. Dombeck,
              151 F.3d 945 (9th Cir. 1998).

              The U.S. Forest Service  (USFS) appealed  from a
              ruling that pollution from grazing cattle is subject to
              certification under § 401  of the  CWA. The USFS
              had issued a grazing permit to the Burrils to graze
              50 head  of cattle in Oregon's Malheur National
              Forest, and the cattle allegedly polluted some of the
              waters within  the  National  Forest.   Appellee
              maintained that the USFS had violated the CWA by
              not obtaining State § 401 certification prior to
              having issued the grazing permit.

              After finding that appellee had adequate standing to
              bring the original action  and that appellee could
              properly  pursue this suit  under  the  citizen suit
              provisions of the CWA,  the court addressed the
              question  of whether the Forest Service grazing

-------
 Issue 15
Water Enforcement Division
ApriM999
permit required certification pursuant to § 401 from
the State  of  Oregon.   The  court  stated  that
resolution of this issue turned on whether the term
"discharge" in the § 1341 of the CWA includes point
and non-point source pollution, or only point source
pollution.  The court concluded that the term
"discharge" as used in the § 1341 only included
point source pollution, and, therefore, no § 1341
certification was  required for the issuance of
USFS cattle grazing permits. The court reasoned
that "the CWA, when examined as a whole, cannot
support the conclusion that  § 1341  applies to
nonpoint sources."  The court observed that the
1972  CWA  replaced the prior reliance on water
quality  standards   with  imposition  of  effluent
limitations   imposed   only   on   point  source
discharges.  The court noted that under the Act,
nonpoint source discharges  were not  directly
regulated  but  were  subject  to grant-based
programs.  It also  stated that  all  of the sections
cross-referenced in § 1341 relate to point sources
discharges.  In addition, the court found that the
distinct use of the terms "discharge" and "runoff" in
a  manner   associated with  point source  and
nonpoint sources discharges, respectively, further
supported its position.  Finally, the court stated that
it agreed "with the Second Circuit that the term
'point source' does not include a human being or
any other animal."

       4.  District court  holds the  City of
           Atlanta  discharged  improperly
           treated CSO wastewater in violation
           of the CWA:

Upper Chattahoochee  Riverkeeper Fund, Inc., et
al.. v.  City of Atlanta. 1997 U.S. Dist. LEXIS 20334
(N.D.  Ga. Nov. 17,  1997).

Plaintiffs the Upper Chattahoochee Riverkeeper
Fund  and others brought a citizen  suit pursuant to
33 U.S.C. § 1365(a) against defendant the City of
Atlanta alleging the City's combined sewer overflow
(CSO) facilities  were  responsible for  numerous
permit and  CWA  violations.   In  its  motion for
summary judgment on liability, plaintiffs alleged that
the City failed to monitor its CSOs pursuant to an
approved sampling plan; failed to conduct proper
              monitoring,  sampling,  and  recordkeeping  as
              required by  its  permit;  and failed  to  maintain
              adequate staffing.  Plaintiffs also alleged that the
              City failed to adequately design the CSO treatment
              facilities, that the CSO discharges violated Georgia
              water quality standards both in the culverts that
              received the wastes and in the natural streams into
              which the culverts discharged, and that the City
              failed to maintain  an alternate  power source as
              required by the permit.   Plaintiffs  also brought
              common law actions for trespass and  nuisance
              against the City.

              Following review  of the  permit  requirements,
              monitoring  data, and evidence  of violations,  the
              court took up the nuisance and trespass claims.
              The court dismissed  a number of plaintiffs  on the
              grounds that they did not  own  land along  the
              affected waterways.  The court also found that the
              remaining plaintiffs had failed to demonstrate any
              injury to their property or failed to show that the City
              was the proximate cause  of any nuisance and
              granted  summary  judgment  to the  City on  the
              trespass and nuisance claims with respect to all
              plaintiffs.

              The court next undertook a detailed review of the
              CWA claims and the liability issues.  In reviewing
              the  allegations  that  the  City failed  to  maintain
              accurate records,  the court  noted  that, despite
              plaintiff's allegations, the permits did not require the
              City to record  the  time of  day samples were
              collected. Plaintiffs also alleged that the City failed
              to  maintain  accurate records  with respect to
              composite sample collection.  In finding for the
              plaintiffs on that issue, the court stated that the fact
              that the Georgia  Environmental Protection Division
              (EPD)  was  aware  the City was not  obtaining
              composite samples was not a defense to intentional
              and flagrant falsification of monitoring reports. The
              court also found that the City failed to conduct
              composite sampling  as required  by its permits;
              never submitted an  approved sampling plan to
              EPD; failed to treat wastes in accordance with the
              CSO plan (the court  noted fecal coliform levels at
              many thousands of times above permitted levels);
              and violated its permits in that it failed to maintain
              adequate staffing.   The court  granted  plaintiffs
              summary judgment with respect to these issues.

-------
 Issue 15
Water Enforcement Division
ApriM999
The court found as a matter of law that the City was
not liable for failing to monitor rainfall and failing to
collect representative samples because the City did
not have an approved monitoring plan. The court
also  declined to consider plaintiffs claim that the
City failed to maintain an alternate power source on
the grounds that plaintiffs had not provided 60 days
notice of the alleged violation prior to filing suit as
required by 33 U.S.C. § 1365(b).

Plaintiffs alleged that the CSO discharges in the
culverts violated Georgia water quality standards for
fecal  coliforms and  metals,  however, the City
asserted there was no  violation  because  the
culverts were not "waters  of the state." The court
noted that Georgia law (O.C.G.A. § 12-5-22(33))
included "drainage systems" within the definition of
"waters  of the state" and that the  culverts were
certainly a drainage system.  The court concluded
that   there  was   overwhelming   data
demonstrating levels of  fecal coliform  and
metals  in the culverts  in excess of Georgia
Water Quality Standards and  held  plaintiffs
were entitled to summary judgment on the issue
that the discharges in the  culverts violated the
CWA.

Plaintiffs also contended that the discharges from
the CSOs  were causing the natural  receiving
streams to  violate water  quality standards.  The
court noted that while the data indicated that the
waters downstream of the culverts did not comply
with state water quality standards for fecal coliform
and  metals,  the data was inconclusive on the
question of the source of the metals violations since
in  some  cases  the concentration  of  metals
upstream of the culverts was either  zero or within
permissible levels.  The court did hold that the
data supported plaintiffs position that the City
was  responsible for violations of fecal coliform
standards in the streams and granted plaintiffs
motion for summary judgment on that issue.
                  C. State/Tribe Water Quality Standards

                     1.  Third   Circuit   upholds   EPA's
                         "treatment as a state" regulation (40
                         C.F.R. §  131.8(b)(3)) and upholds
                         application of tribal water standards
                         to   non-consenting,   non-tribal
                         members:

              Montana v. U.S. Environmental Protection Agency,
              137F.3d 1135(1988).

              Plaintiff-appellants, representatives of the State of
              Montana and several municipalities, appealed  a
              grant  of   summary  judgment  for  defendant-
              appellees,  Confederated  Salish  and  Kootenai
              Tribes and EPA, regarding appellants challenge to
              regulations promulgated by EPA pursuant to § 518
              of the CWA that provide for the treatment of Tribes
              as  states  (TAS)  for purposes  of  the  NPDES
              program. Appellants disagreed with EPA's decision
              to grant  defendant  tribes  TAS status  for the
              purpose of developing water quality standards. The
              Tribes' application for TAS was to obtain authority
              to establish water quality standards for all  point
              sources within the boundaries of Flathead Indian
              Reservation in Montana, which includes lands
              owned by  State and municipal interests.

              Appellants argued that EPA's TAS regulation was
              inconsistent  with  Supreme  Court  decisions
              regarding  when it was appropriate  for tribes to
              engage in non-consensual regulation of non-tribal
              entities. The appellants argued that tribes should
              be able to regulate non-tribal entities only when all
              state or federal remedies have "been  exhausted
              and have proved fruitless." The court disagreed,
              and held  EPA had not committed any material
              mistakes  of  law in  delineating the scope  of
              inherent  tribal  authority.   Rather,  the  court
              pointed out, EPA had carefully followed the lead
              cases on this issue (see, Montana v. United States,
              450 U.S. 544 (1981) and Strate v. A-1 Contractors,
              117  S.  Ct. 1404 (1997)) and  required  that to
              regulate non-tribal entities a tribe must demonstrate
              that  the potential impact of the regulated  activity
              must be "serious and substantial." The court did
              not view  Montana as suggesting that "inherent

-------
 Issue 15
Water Enforcement Division
ApriM999
authority exists only when no other government can
act."

With  regard  to  EPA's  decision  applying  its
regulations in this case, the court found that the
agency  had concluded that the activities of non-
tribal members were sufficiently serious as to pose
serious and substantial threats to tribal health and
welfare. The court observed that prior cases had
held that threats to water rights could be a basis for
invoking inherent tribal authority over non-indians.
The court observed that given that "a water system
is a unitary resource," it would be very difficult to
"separate the effects of water quality impairment on
non-Indian fee land  from impairment on the tribal
portions of the reservation."  The  court observed
that its decision was fully consistent with the Tenth
Circuit's decision in City of Albuquerque v. Browner,
97  F.3d 415 (10th  Cir. 1996),  where that  court
upheld water quality standards that were  more
stringent than federal standards because it found
that the authority to  establish such standards was
"in  accord with powers inherent  in Indian  tribal
sovereignty."   The  court affirmed the district
courts  decision  that  EPA's TAS regulations
were valid "as reflecting appropriate delineation
and application of inherent Tribal regulatory
authority  over non-consenting non-members."

       2.  D.C. Circuit holds that 40 C.F.R. §
           131.20(c)   does  not  impose  a
           mandatory duty on EPA to approve
           water quality standards that a State
           left unchanged following its triennial
           review:

National Wildlife Federation v. Browner, 127 F.3d
1126 (D.C. Cir. 1997).

Plaintiffs National Wildlife  Federation and others
petitioned  the State of Michigan to designate Lake
Michigan an outstanding National  resource water
(ONRW).  Michigan declined to grant the petition,
and plaintiffs  brought a CWA citizen  suit against
U.S. EPA for its failure to review Michigan's denial
of plaintiff's petition.  EPA moved to dismiss the suit
for  lack of subject matter jurisdiction,  and the
district court, having found no nondiscretionary duty
              on the part of EPA to review the State's decision to
              deny  plaintiff's petition,  granted  EPA's  motion.
              Plaintiffs appealed.  On appeal, plaintiffs argued
              that EPA regulations imposed a mandatory duty on
              the Agency to review and  evaluate  Michigan's
              denial of the plaintiff's  petition.

              Plaintiffs  contended  that  under  40  C.F.R. §
              131.20(c),  EPA  was  required to  "review  and
              approve" both new and revised state water quality
              standards, as well as any standards that remained
              unchanged following the State's triennial review of
              its water quality standards. Plaintiffs asserted that
              this requirement was clear from the language of the
              regulation, which, in plaintiff's view, required that
              EPA review and approve the complete results of the
              State's  triennial review.   In addition, plaintiff's
              argued  that EPA's  interpretation  at trial was no
              more than a "convenient litigating position," and that
              to adopt  EPA's position would  allow  States to
              frustrate the goals of the CWA by refusing to revise
              their water quality standards at all.

              EPA argued that under 40 C.F.R.  § 131.20(c) the
              Agency was only obligated to review modifications
              to  the  State's water quality standards, since
              unchanged standards were previously approved by
              the Agency. EPA argued that under the CWA, the
              Agency is under a nondiscretionary duty to review
              and approve only new or revised state water quality
              standards. EPA asserted that plaintiffs provided no
              evidence that the  Agency had intended to expand
              its statutory duties when it promulgated 40 C.F.R.
              § 131.20(c), and provided no evidence supporting
              a  different  interpretation of these  regulations.
              Finally,  EPA noted that under the CWA EPA has
              discretionary authority to revise existing State water
              quality standards where such standards do  not
              meet  statutory requirements.  Thus, EPA had a
              mechanism  for  addressing  inadequate State
              standards, but one premised on EPA discretion.

              The appellate court  held  that    40  C.F.R. §
              131.20(c) did  not impose a mandatory duty on
              EPA to approve water quality standards that the
              State of Michigan left unchanged following its
              triennial review.  Therefore, the  court affirmed
              the   district   court's  judgment  dismissing
              plaintiff's citizen suit and denying its motion for

-------
 Issue 15
Water Enforcement Division
ApriM999
summary judgment. The court agreed with EPA
that plaintiffs presented no evidence that EPA had
previously  interpreted  these regulations  in  an
inconsistent manner, and, to the contrary,  found
that EPA's Water Quality Handbook supported the
Agency's position.  The court also observed that
while the regulation in question could be interpreted
so as to support either party's  position, plaintiff's
position was not compelled by the language of the
regulation.  The court  noted that, generally and
within certain limits, federal agencies are entitled to
substantial  deference  in  interpreting  their own
regulations.   The court  found  that here  EPA's
position was eminently reasonable in light  of the
structure and purpose of the water quality standard
regulations as a whole.

        3.  District  court holds that State law
           that  suspends  enforcement  of
           narrative   nutrient  water  quality
           standards altered State water quality
           standards sufficiently to trigger EPA
           duty to review revised standards and
           approve  or  disapprove of  such
           standards:

Miccosukee Tribe v. United States, 1998 U.S. Dist.
LEXIS 15838 (Sept.  14, 1998).

Plaintiff Miccosukee Tribe brought a citizen suit
under the CWA against defendant EPA  and the
United States asserting that the Everglades Forever
Act (EFA)  (1994) had changed Florida's  water
quality standards and that EPA had ignored its duty
to review and approve or disapprove of  those
revised water quality standards.  Previously, the
State  had  determined  that the  EFA had not
changed State  water  quality standards,  and,  in
correspondence,  EPA  had  agreed  with that
assessment. Based on that finding, in a prior action
before this court, the court had dismissed plaintiff's
claim  for lack of subject matter jurisdiction, since
the EPA was under no mandatory duty to review the
State's  water quality standards.  The Eleventh
Circuit reversed,  finding that  the  district  court
should have conducted its own factual  findings
regarding  whether the  EFA had changed State
water quality standards.  EPA, rather than the court,
              did conduct such  a review,  and  concluded in
              January of 1998, that  the  EFA did not change
              Florida's water quality standards.  In the present
              action, both parties moved for summary judgement.

              Plaintiffs maintain that the EFA changed Florida's
              water quality standards by allowing phosphorus
              discharges into  the Everglades  until  2006, in
              contravention of existing narrative water quality
              standards (i.e.,  at levels acknowledged to cause
              imbalances in the natural aquatic flora and fauna).
              Plaintiffs also argued that  the  EFA resulted in a
              defacto change to State water quality standards,
              since under the EFA if farmers implemented BMPs
              and paid an agriculture privilege tax they were not
              required  to  implement  additional  water quality
              improvement measures prior  to December 31,
              2006.  Finally,  plaintiffs asserted  that the  EFA
              changed State water quality standards because it
              failed to implement a 10 ppb phosphorus limit, the
              maximum that would ensure ecological balance in
              the Everglades.  Defendants argued that the EFA
              was in effect a compliance schedule, that under the
              EFA  the existing water quality standards remained
              in effect, and that the State was  not precluded from
              adopting numeric standards at a date before 2003.
              Defendants also argued that violation of State water
              quality standards did not equate to revisions of such
              standards, and that because EPA was powerless to
              enforce water quality standards against non-point
              source  discharges,  the   BMP  and   delayed
              development of numeric standards represented a
              reasonable approach.

              The court first held that because EPA had explicitly
              considered whether the EFA  changed Florida's
              water quality standards, plaintiff's citizen suit was
              moot. The court reasoned that the district court
              was  only  required to reconsider the EFA's impact
              on water quality standards  absent  action by the
              EPA  Administrator.    However, the court  then
              reviewed whether EPA's assessment of the impact
              of the EFA on Florida's water quality standards was
              consistent with  the  APA.  The court  held  that
              EPA's conclusion that the EFA had not altered
              State water quality standards  was arbitrary and
              capricious and  not supported by the record.
              Rather, the court found that because the EFA in
              effect had suspended enforcement of the existing
                                              10

-------
 Issue 15
Water Enforcement Division
ApriM999
narrative water quality standards for nutrients until
2006,   and  thereby  allowed  discharges  of
phosphorus that violated  the State's  existing
narrative water  quality standards, the Act  had
changed the existing water quality standards. The
court observed that neither the CWA not State law
allowed  compliance  schedules  for  achieving
compliance  with existing  State  water  quality
standards.  Moreover, the court stated that federal
law  did not allow "anything  like a  twelve-year
compliance schedule," as would be provided under
the EFA.  The court  agreed with EPA that mere
violations of State water quality standards did not
equate  to  revisions of  such  standards,  but
distinguished the instant  case  because the EFA
specifically authorized such violations. Where this
was the case,  the  court found  that  the only
reasonable  conclusion was that  the State  had
changed its law.  The court disagreed with EPA's
claim that the  EFA  required  compliance with
existing narrative standards, and found that the Act
only required farmers to  develop programs that
"considered" such  standards.  Finally, the  court
rejected EPA's argument  regarding the non-point
source nature of the discharges, finding that the
CWA "by allowing non-point sources to violate state
water quality standards until 2006, the EFA violates
both the letter and spirit of the Clean Water Act."

    D.  NPDES Permits

        1.  Fifth Circuit  holds that  EPA lacks
           authority  to  require  Louisiana  to
           consult with  FWS and  NMFS  as a
           precondition   for   becoming
           authorized to administer the NPDES
           program:

American Forest & Paper Ass'n v.  U.S. EPA, 137
F.3d291 (5th Cir. 1998).

Petitioners  challenged the final rule in which EPA
delegated   to   Louisiana  responsibility  for
administering the NPDES program within that State.
The challenge focused on provisions that required
the State to consult with the FWS and the NMFS
prior to issuing an NPDES permit and, where FWS
or  NMFS   determined  the   proposed  permit
threatened endangered species,  to  modify the
              permit or face a veto of the permit by EPA pursuant
              to EPA's oversight authority.

              The  Fifth  Circuit considered three issues:   1)
              whether petitioners waived their right to challenge
              the regulation because they did not participate in
              the  agency   proceedings  below;  2)  whether
              petitioners had standing to challenge the rule; and
              3) whether EPA had authority to require Louisiana
              to  consult  as  a  precondition  for   becoming
              authorized to  administer the NPDES program.

              On  the first issue, EPA argued that a  party that
              does not comment on a final rule waives its right to
              challenge that rule in subsequent proceedings. The
              court disagreed.  The court stated that EPA failed
              to identify any provision in the CWA that indicates
              that a party's  failure to comment waives their right
              to judicial review. The court stated that the "statute
              allows 'any interested person' that promptly files an
              objection to seek review in this court."  The  court
              added that it had never held that failure to raise an
              objection during  the comment period  estopped a
              petitioner from raising it on appeal, in fact, the court
              noted it had rejected that very argument previously.
              Further, the  court  stated it  would  have  been
              particularly unfair to estop petitioners from pursuing
              its claims in this instance since EPA  modified its
              rule  subsequent to  proposal   to  include  the
              consultation   requirements.    Finally,  the  court
              dismissed EPA's exhaustion of remedies argument
              finding that, given the significant public comments
              received by the  Agency regarding the scope of
              endangered species protection, EPA clearly had the
              opportunity to consider the issue.

              With  regard  to  standing, the  court  found  that
              petitioners  alleged   injury   were  not  purely
              hypothetical.   Rather,  given petitioners need to
              renew their permits every five years combined with
              EPA's statement that  the Agency "wilf object to
              permits  deemed  likely to jeopardize  a listed or
              proposed species or threaten habitat,  petitioners
              alleged  an actual or imminent injury.  The  court
              rejected EPA's argument that this action could not
              redress   petitioners  injury  because   Louisiana
              remained free to  consult with FWS and NMFS on a
              voluntary basis,  stating that  the issue remained
              whether  EPA  had authority to  require  such
                                              11

-------
 Issue 15
Water Enforcement Division
ApriM999
consultation in a rule. The court also found this
action  was ripe  for review even  though  the
regulation had not yet been applied.  The court
found that  this was a purely legal question and,
given that  no further  facts would  have  aided
resolution of the case, and that delay would have
imposed  a  significant burden on petitioners,  the
dispute was ripe for review.

As  for whether  EPA had authority to require
Louisiana to consult with FWS and  NMFS as a
precondition for becoming authorized to administer
the NPDES program, the court held that it did not.
The court followed a Chevron analysis, but did not
accord EPA deference to EPA's interpretation of
the ESA.  EPA argued that under  CWA § 402(b)
and § 304(i), the nine express requirements for
approval  of a state  NPDES program constitute
minimum requirements, but that nothing in § 402(b)
prohibits   EPA   from   imposing   additional
requirements. The court disagreed, stating that the
language of § 402(b) was non-discretionary and
that such language required EPA to approve a state
program unless that program failed to meet one of
the nine  enumerated requirements.  The  court
observed that EPA's claims were weakened by §
402(b)(6),  (which grants EPA veto  power over
proposed   permits  that  impair   anchorage   or
navigation)  because "Congress could have, but did
not, grant EPA an analogous veto power to protect
endangered species." The court found that §  304(i)
only required  EPA  to  promulgate  regulations
governing the approval process for state programs,
but that it did not alter EPA's authority over such
approvals in any relevant regard.  Thus, the court
concluded that Congress had spoken to the issue
presented.

The court  distinguished American Iron &  Steel
Institutev. EPA. 115 F.3d 979 (D.C.  Cir. 1997) from
the present case, finding that AISI addressed §
118(c)(2) of the CWA, which provided a broader
grant of authority than § 402(b) to address aquatic
life and wildlife. Finally, the court found that nothing
in  the §  7(a)(2)  of the ESA provided EPA with
authority  to add additional criteria to § 402(b).
              Rather,  the  court  stated  that the ESA  directs
              agencies to use their existing authority to promote
              the purposes of the ESA, but that "EPA  cannot
              invoke the ESA as a means  of  creating and
              imposing requirements that are not authorized in
              the CWA."

              The court granted  the petition and vacated and
              remanded that  portion of  the rule  that imposed
              consultation requirements and declared that EPA
              would veto any permit to which the FWS or NMFS
              objects.

                     2. Eighth  Circuit holds  that City  of
                        Glasgow's discharge of pollutants
                        from a drinking water treatment
                        facility  without a  NPDES   permit
                        violates CWA,  and  remands  for
                        determination of whether enhanced
                        permit  fees   violate   State
                        Constitution:

              State  of Missouri v. City of Glasgow,  1998 U.S.
              App. LEXIS 18339 (8th Cir. Aug.  10, 1998).

              The State of Missouri appealed the district court's
              ruling that a  State statute requiring the City of
              Glasgow to pay increased permit fees to operate its
              water treatment facility  violated  the  Missouri
              Constitution.  The  State  also claimed the court
              improperly ordered  the State to issue Glasgow a
              discharge permit for its water treatment facility
              despite the fact that Glasgow had failed  to pay
              required fees. Glasgow operated a drinking water
              treatment facility that pumped  water from  the
              Missouri  River  into the  facility,  treated  and
              distributed the water, and then pumped some water
              as well as some residual sludge back into the river.

              On appeal, the State argued that the district court
              erred  in failing to grant declaratory and injunctive
              relief  on  its claim that the City  of  Glasgow was
              discharging pollutants in violation of federal law.
              The State also  claimed that it should be able to
              collect enhanced annual permit fees from the City.
              Glasgow asserted that it did not have to  pay the
              permit fees because the State statute requiring the
              fees violated the  Hancock  Amendment  to  the
                                              12

-------
 Issue 15
Water Enforcement Division
ApriM999
Missouri Constitution, which  prohibited the State
from reducing the State financed proportion of the
costs of any existing activity or service required of
counties or other political subdivisions.  The Eight
Circuit found that the Hancock Amendment worked
only to prevent  the  State  from  charging an
increased fee to obtain a permit in order to comply
with the State's own water pollution law.  However,
the court found that Glasgow was required to
obtain a permit to comply with  both State and
federal law.    The  court  observed  that  the
Supremacy Clause of the U.S. Constitution dictates
that a State law cannot prevent the administration
and execution  of a federal statute and,  thus, the
State constitutional  provision could not excuse
Glasgow's operation of its water treatment facility
without a permit in violation  of federal law.  The
Eighth Circuit reversed the district court's judgment
and remanded  for issuance of an immediate order
declaring Glasgow to be in violation of the CWA
and enjoining Glasgow from discharging any sludge
from its water  treatment facility into the Missouri
River until a permit was issued.

On the permit fee issue, the  Eighth Circuit found
that the State could lawfully increase fees charged
to cities for operating permits without violating the
Hancock  Amendment  so  long  as the  State
continued to fund the costs  of administering the
state water pollution laws in the same proportion as
existed at the time of the Hancock Amendment's
passage. However, there was insufficient evidence
in the  record  to make  such  a determination.
Therefore, the Eighth Circuit remanded the case for
a determination of whether the increased permit
fees represented an unlawful decrease in the state-
funded proportion of the costs of administering the
State water pollution laws, and reversed the district
court's ruling ordering the state to issue Glasgow
an operating permit.

       3.   Ninth   Circuit   remands   alleged
           NPDES   permit   violation   for
           discharges from storm drain  not
           owned by defendant to determine
           whether defendant could be liable as
           operator of the drain:
              San Francisco Baykeeperv. City of Saratoga, 1998
              U.S. App. LEXIS 3942 (March 5, 1998).
              [Note: Disposition not appropriate for publication
              and may not be cited to by the courts of this circuit
              except as provided by 9th Cir. R.36-3.]

              Plaintiff-appellant  San   Francisco  Baykeeper
              brought a citizen suit  under the CWA that alleged
              that the defendant-appellee  City of Saratoga had
              committed 14,000 violations of its NPDES permit by
              allowing the discharge of fecal coliform from a
              storm drain owned  by CALTRANS but located
              within the City's jurisdiction.   Upon cross motions
              for summary judgment, the district court found that,
              under the permit, the City would bear the burden of
              proving at trial  that the flows discharging from the
              storm drain in  question came from  City-owned
              facilities or activities. Appellants acknowledged that
              the discharges did not come from City-owned storm
              drains and, thus, stipulated to the entry of judgment
              and appealed.

              The Ninth Circuit found that the district court's order
              and stipulated facts incorrectly contemplated liability
              "only for discharges from drains owned by the City,
              not those found to be operated by the City."  The
              court stated that under EPA regulations (40 C.F.R.
              § 122.26(a)(3)(vi)) the "City would be liable  if it
              could  be considered  the operator" of the storm
              outfall at issue.   The  court acknowledged that
              district court may have used the terms "owned" and
              "owned or operated" interchangeably, however, the
              Ninth  Circuit found that because the  issue is so
              pivotal, it must  remand for clarification.

                     4.  EAB holds  that municipal  storm
                         water permits do not need to include
                         numeric effluent limitations  where
                         development of such limitations was
                         infeasible and the  permits included
                         best management practices (BMPs)
                         designed to reduce the discharge of
                         pollutants to the "maximum  extent
                         possible"   (MEP)  as   well   as
                         compliance with state water quality
                         standards:
                                              13

-------
 Issue 15
Water Enforcement Division
ApriM999
In re:  Arizona Municipal Storm,  1998 NPDES
LEXIS 1 (May 21, 1998).

Petitioners appealed from EPA Region IX's denial
of their evidentiary hearing request on several legal
issues pertaining  to five  NPDES  storm water
permits issued to five municipal separate storm
sewer systems (MS4s) (City of Tucson,  Pima
County, City of Phoenix, City of Mesa, and the City
of Tempe).  Petitioners asserted 1) the Region and
Arizona DEQ improperly met with the permittees
during the comment period; 2) the permits did not
ensure compliance with water  quality standards
because they did not contain numeric effluent limits
or whole effluent toxicity (WET)  limits; 3) the
permits violate the  CWA  because they do not
require WET testing  of the discharge; 4) the storm
water management programs incorporated into the
permits fail  to quantify pollution reduction;  5) the
permits for Pima County and Tucson fail to address
pollution from new areas of development;  6) the
Region improperly allowed the permittees to defer
submission  of certain components of their storm
water management programs; and 7) the Region
illegally deferred the requirement that the City  of
Tucson demonstrate adequate legal authority  to
implement its storm water management program.

The EAB found that issues 4, 5 and 6 were not ripe
for review because portions of the permits had been
withdrawn and would be subject to administrative
review when reissued.  With regard to the claim  of
having held improper meetings with the permittees,
petitioners asserted that 40 C.F.R. § 124.10-18
required that comments be submitted in writing  or
at a public hearing and thus the meetings with the
permittees  were  improper.    Petitioners   also
asserted that such meetings constituted improper
exparte communications. The EAB disagreed with
both  arguments,  finding  that  nothing  in the
regulations  barred  the  Region from  scheduling
additional meetings with the permit applicants and
the state prior to  permit issuance.  The EAB
observed that here none of the issues discussed at
the   meetings  were  new  and  notes   and
documentation from the meetings were placed  in
the record so that petitioners were not in any way
prejudiced.  In addition,  the Region found that the
              restriction on  ex parte communications  imposed
              under § 124.78(d) applies only after the granting of
              an evidentiary hearing.  Here, the EAB observed,
              no such  hearing  was  held  and therefore  this
              restriction was not applicable.

              Petitioners second claim was that each permit must
              include  numeric  effluent  limits that  ensured
              compliance with state water quality standards.  The
              EAB disagreed, and found that where,  as here,
              development of numeric effluent limitations was
              not feasible due to the lack of data about the
              impact of storm water discharges on receiving
              waters in Arizona it was appropriate to include
              best management  practices (BMPs) in those
              elements of the storm water management plan
              adopted  in the permits and that  such BMPs
              constituted effluent limits intended to reduce
              the discharge  of pollutants  to the maximum
              extent  possible (MEP) and  compliance  with
              state waterquality standards. The EAB observed
              that the term "effluent limitation" is defined to mean
              any  restrictions  on  quantities,  rates,   and
              concentrations of constituents  discharged  from
              point sources. The Board also found the  Region's
              approach to  be consistent  with  relevant Agency
              regulations and policy.  The EAB noted that the
              permits imposed reporting requirements that might
              have provided the basis for  "appropriate permit
              modifications during the permit term."

              With regard  to  petitioners  assertion that annual
              WET testing  of the discharges should have been
              required  in  the permits,  the  EAB found  that
              petitioners failed to adequately explain or discuss
              why the Region's  response to comments on this
              issue was insufficient.  The Region had  originally
              responded  that the state's  approved  toxicity
              implementation  guidelines  called for  no toxicity
              testing  in the relevant cycle of  MS4 storm water
              permits while a toxicity testing program appropriate
              for arid environments was being developed.   The
              EAB, thus, denied review of this issue.

              Finally, with  regard to Tucson's  authority to
              implement a storm water management  program
              (SWMP),  petitioners  argued  the  requirement
              imposed under § 122.26(d)(2)(i) had been deferred
                                             14

-------
 Issue 15
Water Enforcement Division
ApriM999
since the permit requires a review of such authority
and  the  Region's  plan  was  to  address any
inadequacy when the next permit term started. The
EAB declined to interpret such action as improperly
deferring the requirements of  § 122.26(d)(2)(i).
Rather,  the  EAB  stated that  in the absence  of
information  suggesting  that  Tucson's  general
authority to protect health and the environment was
inadequate, the Region's approach was consistent
with existing regulations.

       5.  EAB holds that  a NPDES  permit
           provides "shield" against liability for
           discharge of pollutants not listed in
          the  permit  only  when   permit
           applicant   has   made  adequate
           disclosures during the application
           process about the nature  of its
           discharges:

In re: Ketchikan Pulp Company, CWA Appeal No.
96-7 (May 15, 1998).

Ketchikan Pulp Company (KPC), which operated a
pulp mill  in Ketchikan,  Alaska, appealed an Initial
Decision assessing a $23,000 civil penalty against
it for alleged violations of CWA § 301 (a).  The
alleged violations were based on three discharges
from KPC's mill  into  Ward Cove,  a navigable
waterway adjacent to the mill.

The  three  discharges  involved  the  following
incidents. First, as part of equipment maintenance,
KPC partially emptied one of its one million gallon
settling tanks at its wastewater treatment plant by
draining a two-year accumulation of flocculent into
Ward Cove  through  the  flocculent drain  line.
Second,  in order to repair piping at the bottom of
the aeration basin in the secondary wastewater
treatment plant, KPC drained the contents of the
9.3 million gallon aeration basin and discharged an
undetermined amount  of sludge into Ward Cove.
Third, employees  operating  the mill's digesters
cleaned  up  an accidental  spill  of approximately
4,450 gallons of magnesium bisulfite (cooking acid)
by washing the substance down through the floor
drains  in  the  digester area,  where it went out
untreated, into Ward Cove.
              The  NPDES permit in  effect at the time of the
              discharges covered  KPC's discharges of effluent
              from the mill for the period 1985  to 1990.  The
              permit   contained   no   effluent  limitations  for
              flocculent or cooking acid; in fact, neither substance
              was  mentioned in the  permit.   The permit also
              contained no provisions relating to the control or
              prevention of industrial spills.

              KPC's  appeal  raised  the  following  issues:   1)
              whether the flocculent or cooking acid discharges
              were covered under the permit, such that the permit
              shielded KPC from liability for those two discharges;
              and 2)  whether the sludge discharge violated the
              terms of the permit.

              The  EAB found  that the permit did not shield
              KPC from liability for the flocculent or cooking
              acid discharges because KPC did not  make
              adequate disclosure  about either discharge
              during the application process. With respect to
              the sludge discharge, the EAB found that as part of
              the  treatment process,  the sludge  ultimately
              discharged was removed from treated wastewater
              and returned to the aeration basin to  continue the
              cycle of treatment. Thus, the sludge in the aeration
              basis at the time of discharge clearly was removed
              during the course of treatment in direct violation of
              the permit's unambiguous prohibition against such
              discharge.

              Accordingly, the EAB affirmed the Initial Decision as
              to KPC's liability under CWA.  In addition, the EAB
              affirmed  the  $23,000  penalty,  which  was  not
              specifically challenged by either party, for the three
              CWA violations.

                  E.  State Certification

                     1. Second  Circuit  holds  that  FERC
                        must include in  its licenses all
                        conditions imposed by a State under
                        its  § 401 certification:

              American Rivers v. Federal Energy Regulatory
              Commission, 129 F.3d 99 (2nd Cir. 1997).
                                              15

-------
 Issue 15
Water Enforcement Division
ApriM999
Petitioners American Rivers, Inc., and the State of
Vermont, sought review of several licensing orders
issued  by  the  Federal  Energy   Regulatory
Commission   (FERC),   which   licensed   six
hydropower projects located on rivers in Vermont.
In issuing the licensing orders, FERC refused to
include certain conditions developed by the State
and included in the State's Clean Water Act (CWA)
§401 certification of the license's conformance with
State water quality standards. FERC had found the
conditions to be beyond the scope of Vermont's
authority under the CWA.  Petitioners requested
rehearing of the licensing orders  before FERC,
which FERC denied. Petitioners then sought review
by the Second Circuit Court of Appeals. The issue
on review concerned the relative scope of authority
of the States and the FERC under the CWA and the
Federal  Power Act (FPA).

Petitioners  contended   that  according  to   the
language of CWA § 401 (d)  "...  FERC  has no
authority to review and  reject the substance  of a
state  certification or  the conditions contained
therein and must incorporate into its licenses the
conditions as they appear in state certifications."

FERC argued that it is required to adopt only those
conditions that are within the State's authority to
impose under § 401, and that such conditions must
be reasonably  related to  protecting water quality
and must otherwise conform to the requirements of
§ 401. FERC also asserted that CWA §§ 401 (a)(3)
and  401(a)(5)   support  FERC's  authority  to
distinguish improper conditions. In addition, FERC
maintained that under Keating v. FERC, 288  U.S.
App. D.C. 344,  927  F.2d 616  (D.C. Cir.  1991), it
possessed authority to review and reject conditions
that violated the terms of § 401.  FERC argued that
without such authority it would be impossible for the
it fulfill its statutory mission. Finally, FERC asserted
that certain conditions imposed under § 401 were
inconsistent with FPA provisions.

The court held that FERC was required by CWA
§ 401 to include in its  licenses all conditions
imposed by a State under its § 401 certification
notwithstanding  FERC's view  that some of
those  conditions  were  beyond the  State's
              authority under the CWA. Thus, the court granted
              the petition for review, vacated the orders of the
              FERC, and remanded  the  matter  for further
              proceedings consistent with the opinion.  The court
              first noted that FERC was not due deference  in
              interpreting the  CWA,  since  FERC  was not
              responsible for implementing the CWA.  The court
              then reviewed the language of CWA § 401 (a) and
              § 401 (d), and noted that the language of § 401 (d),
              which requires that State certification "shall become
              a condition of any federal license or permit..," was
              unequivocal.  The court agreed with the FERC
              that conditions imposed under §401  must relate
              to protecting water quality, but emphasized that
              FERC did not have authority to determine which
              certification conditions were proper and which
              were  improper  under 401 (d).  This,  the  court
              observed, was the "crux of the dispute in this case."
              The  court  observed that prior to  issuing the
              licensing order to Turnbridge Mill Corporation (the
              first order challenged here) FERC's position had
              been that it was required under § 401 to include in
              its license all  conditions imposed through  State
              certification. The court noted that EPA shared this
              view.   The court then found  that FERC read
              Keating, the decision upon which FERC premised
              its change of position, too broadly. The court found
              that Escondido Mut. Water Co. v. La Jolla Band  of
              Mission Indians. 466 U.S. 765, 80 L.  Ed. 2d 753,
              104 S. Ct. 2105 (1984) (Commission required by
              mandatory language in FPA to include conditions
              deemed necessary by the Secretary of the Interior
              for the protection and utilization of Native American
              reservation) was  more on point.  The court also
              observed  that where a State  § 401  certification
              included conditions  that,  in FERC's  view,  were
              improper, the appropriate remedy was  for the
              licensee to challenge such conditions, or for FERC
              to not issue the license.

                     2.  Ninth Circuit holds that certification
                        is required only where a discharge is
                        present:

              Citizens Interested  In Bull Run v.  R.L.K. & Co.,
              1998 U.S. App. LEXIS 3926 (9th Cir. Mar. 4, 1998).
                                             16

-------
 Issue 15
Water Enforcement Division
ApriM999
[Note: Disposition not appropriate for publication
and may not be cited to or by the courts of this
circuit except as provided by 9th Cir. R. 36-3.]

Appellants brought suit on September 17,  1996,
against  R.L.K. & Co., operator of a ski  area, for
violations of  the Clean  Water Act.   Appellants
sought a declaratory judgment that R.L.K. violated
the CWA  by operating under an invalid Forest
Service  permit  and  by  discharging  salt;  an
injunction ordering R.L.K. to halt its salting pending
Oregon  DEQ certification;  and civil  penalties  of
$5,000 per day of salting since April 1992. The
Oregon  DEQ certified operation of the ski area on
December 12, 1996.  In addition, R.L.K. submitted
an uncontested affidavit that it did not salt between
August 26 and December 12, 1996.

Appellants   raised  three   arguments.     First,
appellants  cited  PUD  No.  1   v.  Washington
Department of Ecology, 511 U.S. 700, 114 S. Ct.
1900 (1994)  in arguing that the permittee's overall
operation was subject to certification, even where
the discharge had ceased (i.e., that "an uncertified
permittee was a violator regardless of any threat of
discharge"). The court disagreed, and found that
in PUD 1 the Court stated "that certification was
authorized once 'once the threshold condition,
the existence  of  a discharge,  is  satisfied'."
Second, appellants argued that R.L.K. continued to
discharge salt after it had ceased salting activities
through  runoff  from snowmelt.   The  court
observed  that  such runoff did not appear to
constitute  "an 'activity' that may  result in a
discharge,"  as required under 33 U.S.C.  §
1341 (a),  and held  that  the issue  was not
properly before the court because  appellants
failed to raise it in their original brief.  Finally,
appellants argued that the district court  erred in
concluding  that there was  no  genuine  issue
concerning  the  cessation of salting.   Appellants
relied on an affidavit that asserted broken bags of
salt were seen  in the Salmon River, and photos
taken by a journalist that showed bags of salt in the
Little  Zig  Zag   Stream.    The  Circuit Court
concluded  that  such   evidence  was  not
              inconsistent with  R.L.K.'s  showing  that  it
              ceased  salting on August 29, 1996, and held
              that no  genuine issue of material fact existed.
              The court affirmed the lower court's decision.

                     3.  Ninth  Circuit holds  that the term
                        "discharge" as used in CWA § 1341
                        is limited to discharges from point
                        sources and does not encompass
                        nonpoint source pollution and that,
                        therefore,  no State certification  is
                        required for the  issuance of cattle
                        grazing permits:

              Oregon  Natural Desert Association v. Dombeck,
              151 F.3d 945 (9th Cir. 1998).  See case summary
              on page 6.

                  F.  Section 404/Wetlands

                     1.  Federal  Circuit holds  that takings
                        claim accrued upon denial of permit
                        and  is  thus  barred  by  six-year
                        statute of limitations:

              Bayou Des Families Development Co. v.  United
              States. 130 F.3d 1034 (Fed. Cir. 1997).

              Plaintiff  Bayou Des  Families  (BDF) Development
              Corporation alleged that the denial,  in September
              1979,  by  the  U.S.  Army Corps of Engineers
              (USAGE) of a CWA  § 404 after-the-fact permit to
              build a levee constituted a taking of its property
              without just compensation, in  violation of the Fifth
              Amendment. Plaintiff brought suit in the Court of
              Federal Claims in July, 1991. That court dismissed
              the suit as  barred  by  the  six-year statute  of
              limitations.   Plaintiff appealed.   On  appeal the
              central issue before the court was when did BDF's
              claim become ripe for adjudication.

              Key points in the 25 year history of the case include
              the following. BDF sought an after-the-fact dredge
              and fill permit in 1975, which was denied by USAGE
              in  September,  1979.  Uncertainty regarding the
              placement of a flood and hurricane levee, and plans
              to  build Jean Lafitte  National  Park, contributed to
                                              17

-------
 Issue 15
Water Enforcement Division
ApriM999
the  USAGE'S  delay in acting on  the permit
application. Ultimately, the park was established in
1978 (the park contained 1000 of the 2000 acres
that  constituted  plaintiffs  development).   BDF
responded to the USAGE'S denial of the permit by
filing suit  in district court, which denied BDF's
challenge  to the permit denial.  Finally, at the
request of  Jefferson Parish, USAGE granted a
permit  to construct a hurricane levee  to the West
Jefferson Levee District.  To obtain a  right-of-way
for   the  levee,  the  Levee  District  filed   an
expropriation suit against BDF.  As a result, the
state trial court awarded BDF approximately  $15
million.

Plaintiff BDF argued that its taking claim did not
ripen  until 1986,  when the  USAGE  granted
Jefferson Parish a permit for a hurricane levee on
an alignment other than that of BDF's ordinal plan.
BDF maintained that since prior to that point it was
possible that the hurricane levee would be built on
BDF's  original alignment,  BDF's land  was  not
rendered worthless until the USAGE finally resolved
the matter by issuing  the  permit.   The court
disagreed, and found that the taking accrued on
September 21,1979, the date the USAGE denied
BDF's  levee  permit.   The court observed  that
although determining  the  point in  the permit
application  process when a final decision is made
by the responsible  agency  is difficult, plaintiff's
actions in litigating the USAGE'S decision suggests
the finality of the decision. The court also observed
that in  the expropriation suit brought by the West
Jefferson Levee  District, the Supreme Court of
Louisiana recognized that the USAGE'S denial of
the permit in 1979 destroyed the value of BDF's
land. The court noted that even if the permit denial
in  1979 had not constituted final action on the
permit  application,  the decision of  the federal
district  court in 1982 "left no doubt about the legally
binding nature  of  the government's   action."
Ultimately, the court concluded that BDF's wetlands
had no economic value for development purposes
following the permit  denial.   Because the taking
accrued  beyond   the  six-year   statute   of
limitations period, the court upheld the Court of
Federal Claims dismissal.
                     2.  Federal Circuit holds that withdraw
                        of §  404 permit application from
                        active   status  based   on  the
                        appellant's  failure  to complete a
                        valid  WQC  application  did  not
                        constitute  a final decision by the
                        USAGE:

              Heck and Assoc., Inc. v. United States, 1998 U.S.
              App. LEXIS 1003 (Fed. Cir. Jan. 23, 1998).

              Appellant  Howard  Heck and Associates,  Inc.,
              appealed the judgment of  the Court of Federal
              Claims, 37 Fed. Cl. 245 (1997), which dismissed
              appellant's complaint and held that the court lacked
              jurisdiction over appellant's Fifth Amendment taking
              claim because the claim was not ripe for review.  In
              seeking a CWA § 404 permit, Heck was required to
              obtain a water quality certification (WQC) from the
              State  of  New Jersey.  Heck submitted a WQC
              application to the NJDEP, but never submitted an
              adequate alternatives analysis, and NJDEP did not
              issue  the WQC and ultimately canceled  Heck's
              WQC  application.  Heck continued to seek the §
              404 permit from the U.S. Army Corps of Engineers
              (USAGE),  arguing that under CWA  § 401 the
              requirement for WQC had been waived.  Despite
              publishing the § 404 permit application for public
              notice, however, the USAGE notified Heck that the
              WQC  requirement could not be waived, and that
              USAGE had withdrawn the § 404 application from
              active status until the WQC was provided.  Heck
              subsequently filed  a Fifth Amendment takings
              claim,  which the court found to be not ripe because
              the USAGE had never issued a final decision on the
              merits.

              The central  issue on appeal was whether the
              USAGE'S  withdraw of Heck's §  404  permit
              application  from active status based on the
              failure to complete the  application  by not
              including the WQC constituted a final decision
              by the USAGE.   The court held that it did not.
              The court held that the dismissal of the § 404
              application by the USAGE as incomplete  was
              not a final decision or a decision on the merits.
              The court observed that submission of a WQC is a
              prerequisite to issuance of a § 404 permit, and that
                                             18

-------
 Issue 15
Water Enforcement Division
ApriM999
under  33 C.F.R. §  320.4(j) the  USAGE  had
discretion to deny the permit without prejudice if the
State refused  to  certify compliance with water
quality standards.  The court noted that neither the
State of New Jersey nor the USAGE refused to give
its approval; rather, both canceled the application
as incomplete.  The  court stated that Heck had
failed to demonstrate that NJDEP had made any
decision  on   the merits  that   denied   Heck
economically viable use of its land and, thus, could
not argue that NJDEP's cancellation of Heck's
WQC application constituted a final decision.  The
court observed that Heck remained free to seek the
necessary WQC.

The court found that Heck's other arguments lacked
merit as well.  The court stated that Heck had not
demonstrated that the WQC application process
was futile because Heck had never completed the
process and had its application rejected.  Nor had
Heck demonstrated that the State of New jersey
had unduly delayed the application process; rather,
the court observed that  Heck was responsible for
the delay.  The court rejected Heck's  hardship
argument as well, finding that any hardship that was
experienced by Heck was due to its own refusal to
complete a valid WQC application.  Finally, the
court found that the theory that  NJDEP violated
state  law in demanding the alternatives analysis
must  be challenged  in State court.  The  court
affirmed  the judgment  of the court of Federal
Claims.

       3. Fourth Circuit  upholds  denial of
          CWA § 404 permit where detrimental
          environmental impacts of the  fill
          project outweigh its benefits:

B & B Partnership v. United States, 1997 U.S. App.
LEXIS 36086 (4th  Cir. Dec. 24, 1997).

Appellants B & B Partnership challenged the U.S.
Army Corps  of Engineers' (USAGE) denial of a
§ 404 permit that would have authorized appellants
to fill 1.5 acres of wetlands as part of developing a
construction and debris landfill.  The denial  was
based on the USAGE district engineer's findings
that the detrimental environmental  impacts of the
              project outweighed its benefits, and that appellants
              had not demonstrated the absence of practicable
              alternatives.   The district court  had upheld the
              USAGE'S decision, and appellants appealed.

              Appellants raised two issues on appeal:  1) whether
              the district court erred in excluding from review
              several documents that pertained to two USAGE
              permit decisions addressing other construction and
              debris landfills situated in  the same county; and 2)
              whether the decision in this case by USAGE was
              arbitrary and capricious, an abuse of discretion, or
              otherwise not in accordance with the law.

              Appellants argued that the district court abused its
              discretion  by   denying  appellants'  motion  to
              supplement the record with documents pertaining to
              USAGE   permit  decisions   (i.e.,  approvals)
              addressing two other construction and debris landfill
              situated in the same  county. Appellants asserted
              the USAGE relied on  these documents when it
              evaluated appellants'  application,  however, the
              district court had concluded otherwise. The Fourth
              Circuit found  that  appellants had   failed  to
              demonstrate that the USAGE relied on either of
              the relevant  documents when  it  evaluated
              appellants' application  and,  therefore, those
              documents did not pertain to the merits of the
              USAGE'S decision. The Fourth Circuit held that
              the district court had  not abused its discretion
              in denying the motion to admit the documents.

              With regard to whether the USAGE'S decision to
              deny the permit was arbitrary  and capricious,
              appellants argued that the  USAGE'S conclusions
              regarding the environmental impacts of the project
              were not  supported by facts in the record.  The
              Fourth Circuit  disagreed, and  found that the
              record provided adequate evidentiary support
              forthe USAGE'S findings and conclusions. The
              court held that the  evidence in the  record
              provided a rationale basis for the   USAGE'S
              denial of appellant's permit application.

              The court also noted that, contrary to appellants'
              assertion, USAGE was not required to  submit the
              materials  that appellant had provided to USAGE in
              response to  public   comments  on the permit
                                             19

-------
 Issue 15
Water Enforcement Division
ApriM999
application to the Fish and Wildlife Service, the
National Marine Fisheries Service, and the EPA for
their review. Rather, the court found  that under
USAGE  regulations  (33 C.F.R.  § 325.2(a)(2))
USAGE was only required to do so if the district
engineer believed that the supplemental materials
would  have affected the  public's  view of the
proposal.   The court observed  that here the
supplemental materials were  not  relevant to the
principal bases for the USAGE'S decision.

       4.  Fourth Circuit holds that the portion
           of USAGE regulations which define
           waters of the U.S. to include those
           waters whose  degradation  "could
           affect" interstate commerce exceeds
           its authority under the Clean Water
           Act and the regulation is invalid:

U.S. v. Wilson.  1997 U.S. App. LEXIS  35971 (4th
Cir. Dec. 23, 1997).

Defendants J. Wilson, Interstate General, L.P., and
St.  Charles Associates, L.P.,  appealed  felony
convictions for  knowingly  discharging fill  and
excavated material into wetlands without a Clean
Water Act  §  404  permit.   As  part  of the
development of a planned community, defendants
had  attempted  to drain three (of four relevant)
parcels of land that  were  wetlands  by  digging
ditches and depositing the excavated  dirt next to
the  ditches  (i.e.,  sidecasting).    In  addition,
defendants deposited fill and gravel on three of the
four parcels. On appeal, defendants argued that 1)
the  U.S.  Army Corps  of  Engineers' (USAGE)
regulations (33 C.F.R. § 328.3(a)(3)), which in part
define waters of the U.S. to include those waters
whose  degradation  "could   affect"   interstate
commerce, exceed the authority of the CWA and
the  Commerce  Clause   of  the  Constitution
(defendants also asserted that the district court's
instructions to the jury,  which were based  on §
328.3(a)(3), were improper); 2) the district  court
improperly applied CWA requirements to wetlands
that  did  not have a  "direct  or  indirect  surface
connection to otherwaters of the U.S."; 3) the CWA
does not apply to "sidecasting"; and 4) for a felony
conviction  under  the  CWA  the   mens  rea
              requirement must be proven for each element of
              the  violation.    Defendants  also   challenged
              evidentiary rulings of the district court,  and aspects
              of their sentences.  The court  issued a ruling
              resolving only the interstate commerce and criminal
              intent issues (i.e. issues 1  and 4).  While two of the
              three judges on the panel issued opposing opinions
              on the sidecasting and adjacency issues, neither
              opinion had the support  of two judges  so as to
              constitute an opinion of the court.

              Defendants argued that "in allowing the jury to find
              a  nexus  with  interstate  commerce based  on
              whether  activities  'could  affect'   interstate
              commerce, the [district] court authorized a 'limitless
              view of federal jurisdiction,' far more expansive than
              the standard recently summarized in U.S. v.  Lopez,
              514 U.S. 549, 131  L Ed.  2d 626, 115 S. Ct. 1624
              (1995).  The Fourth Circuit agreed, and held that
              in promulgating 33  C.F.R.  § 328.3(a)(3), the
              USACE  "exceeded  its  congressional
              authorization under the Clean Water Act,  and
              that,  for  this reason, 33 C.F.R.  § 328.3(a)(3)
              (1993) is  invalid."  The  Fourth Circuit observed
              that under Lopez Congress could clearly regulate
              discharges of pollutants  that substantially affect
              interstate  commerce (514 U.S. 549,  558-59).  It
              also  recognized that Congress presumably could
              regulate  the  discharge  of   pollutants  into
              nonnavigable waters to the extent necessary to
              protect the use or potential use of navigable waters
              as instrumentalities of interstate commerce. Finally,
              the court  observed that  Congress arguably has
              power to  regulate  discharges of pollutants into
              waters that themselves flow across state lines, or
              that connect to waters  that do so.  However,  the
              court found that § 328.3(a)(3) "requires neither that
              the regulated activity have a substantial affect on
              interstate  commerce, nor that the covered waters
              have  any sort of nexus with navigable, or even
              interstate, waters."   Based  on  its  conclusion
              regarding  §  328.3(a)(3), the court found that  the
              district  court's jury instruction  based on  this
              regulation was also erroneous.

              Defendants further contended that the district court
              erred in instructing the jury with regard to the mens
              rea required to establish the criminal  violations (§
                                              20

-------
 Issue 15
  Water Enforcement Division
                                   ApriM999
1319(c)(2)(A)). Specifically, defendants argued that
the CWA required that the government show the
defendants were aware their conduct was illegal,
and also required that the appropriate mens rea be
shown to accompany each element of the offense.
The defendants argued that this case should  be
governed by Liparota  v. United States, 471 U.S.
419, 85 L  Ed. 2d 434, 105 S. Ct.  2084 (1985)
(government  had to prove defendant  knew  his
action was unauthorized in proving violation of food
stamp act). The court distinguished Liparota, and
noted that Liparota did not create a mistake-of-law
defense.  Rather, the court found that the structure
of the CWA,  it legislative history, and applicable
precedent (see, U.S.  v. International Minerals &
Chemical Corp.. 402 U.S. 558,  29. L. Ed. 2d 178,
91 S. Ct. 1697 (1971) (Court declined to find proof
of defendant's knowledge of the illegal nature of his
act was a required element in  criminal violation))
supported the conclusion that the government need
not show defendants were aware their acts were
unlawful.  Thus, the court declined to hold that
the CWA requires that defendants must have
known their acts were illegal, but did hold that
the CWA "requires the government to prove the
defendant's knowledge of facts meeting each
essential element of  the substantive offense."
Because  the jury  instructions did not adequately
require  the government to  prove  defendant's
knowledge  with regard to each element of the
violation,  the court  found that a new trial was
required.
                summary judgment to plaintiffs AMC and enjoined
                USAGE and EPA from enforcing the "Tulloch Rule."
                (See,  American Mining  Congress v.  U.S. Army
       5.  D.C.  Circuit affirms
           Tulloch Rule:
rejection  of
National Mining Association v. U.S. Army Corps of
Engineers. 145 F. 3d 1399 (D.C. Cir., 1998).

The parties appealed a district court opinion that
held that the "Tulloch Rule" (which removed the de
minimis exception to the U.S. Army  Corps  of
Engineers'  definition of the term "discharge  of
dredged material" and expanded the definition to
include any redeposit, including incidental fallback,
of dredged material) exceeded the U.S. Army Corps
of Engineers' authority under § 404 of the Clean
Water Act (CWA).  The district court had granted
                Corps of Engineers,
                1997).
                    951  F. Supp.  267 (D.D.C.
Appellees argued that the "Tulloch Rule" exceeded
the USAGE'S statutory authority because it would
regulate  incidental  fallback which,  because  it
returns dredged material to virtually the same spot
from which it came, cannot be said to constitute the
addition  of  a pollutant  to  jurisdictional waters.
USAGE argued that under  the CWA incidental
fallback could be classified as a discharge since the
term "discharge" is defined to include the addition of
a pollutant to navigable waters and the definition of
the term "pollutant" includes "dredged soils" as well
as "rock," "sand," and "cellar dirt." (33 U.S.C. 1362
(12), (6)).

The  D.C. Court of Appeals held that incidental
fallback  did not constitute the  addition of a
pollutant to waters of the U.S. and, thus, that
the "Tulloch Rule" exceeded USAGE'S authority.
The  court found incidental fallback constituted a
"net  withdrawal, not an addition, of material" and,
therefore, it could  not constitute a discharge. The
court observed that "Tulloch Rule" would subjected
"virtually all excavation and dredging performed in
wetlands" to federal regulation and the court found
this to exceed authority granted in the CWA. The
court noted  that Congress has established two
distinct statutory programs to address the removal
of dredged materials from waters (i.e., CWA) and
the discharge of dredge  and fill  material (i.e., the
Rivers and  Harbors Act). The court rejected the
appellants arguments that the specific exemptions
in § 404(f) of the CWA support their interpretation
of the term "discharge."  In response to arguments
that  the  court's  interpretation  of  the  term
"discharge" would  effectively read the regulation of
dredged material out of the CWA, the court stated
that  it was not holding that the USAGE could not
legally regulate some forms of redeposit under §
404. The court reiterated, however, that USAGE'S
assertion of jurisdiction over  "any  redeposit,"
including incidental  fallback, went  beyond  the
agency's permissible authority.  The  court noted
                                              21

-------
 Issue 15
Water Enforcement Division
ApriM999
that  since the CWA establishes no  bright line
distinguishing incidental fallback from "regulable
redeposits," "reasoned attempts by the agencies to
draw  such  a  line  would  merit  considerable
deference." The court also distinguished opinions
from several  other circuits  that supported the
proposition that any redeposit may  be regulated
under § 404 finding that such opinions predated the
"Tulloch Rule." The court also rejected appellants
arguments that a more lenient test than Chevron
should be applied here due to the facial challenge
to the regulation.

Finally, with regard to remedies, the court found
that once the  district court found that the "Tulloch
Rule" was illegal, it was under no further duty to
make explicit findings regarding the  elements
necessary for a permanent injunction. Further, the
D.C. Circuit Court found, based on prior decisions
as well, the APA, and concerns regarding a flood of
duplicative litigation, that when, as here, an agency
rule is found to be unlawful, "the ordinary result is
that the rules are vacated—not that their application
to the individual petitioners is proscribed." The D.C.
Circuit Court affirmed the judgment  of the district
court.

       6. District court enjoins USAGE  from
          accepting preconstruction notices
          pursuant to NWP 29 after June 30,
          1998,   pending  compliance  with
          NEPA:

Alaska Center for the Environment v. West,  1998
U.S. Dist. LEXIS 6644 (D.AL,  April 30, 1998).

Plaintiffs  challenged  the  U.S.  Army  Corps of
Engineers (USAGE)  issuance of its Nationwide
Permit  for Single-Family  Housing  (NWP  29),
asserting that it violated the CWA, NEPA, and the
ESA. Plaintiffs argued that NWP 29  harmed them
by depriving them of opportunities to participate in
the permitting process and by threatening harm to
the environment. Specifically plaintiffs asserted that
1) USAGE could  not ensure minimal adverse
environmental effects as  required  by CWA  §
1344(e) through the process used under NWP 29
known   as preconstruction  notice (PCN);  2)
              USAGE'S decision document acknowledged that
              NWP 29 would impact threatened and endangered
              species in contravention of the ESA; and 3) under
              NEPA, USAGE had not adequately considered the
              no-action alternative,  and  had  not  considered
              reducing the one-half acre  ceiling and excluding
              high-value waters.

              Upon motions for  summary judgment the court's
              review  focused  on  USAGE'S  compliance with
              NEPA.    The court  held  that  because the
              USAGE'S Decision Document supporting NWP
              29 did  not contain meaningful discussion  of
              why  the acreage  limitation  should  not  be
              smaller and why  high-value waters should  be
              excluded,  the  decision  document  did not
              constitute  an  adequate   Environmental
              Assessment. The court remanded it to USAGE for
              further proceedings. The court observed that under
              NEPA  USAGE  was  obliged  to  consider  an
              appropriate  range of alternatives, but had failed to
              do so.  The court  noted that commenters on the
              proposed NWP had raised the issues of alternative
              acreage ceilings  and protecting high-value waters,
              but that the Decision Document did not indicate that
              USAGE had not fully considered these alternatives.
              The court found that USAGE'S decision to reject the
              no-action alternative was neither arbitrary and
              capricious or unreasonable.

              The court then considered whether injunctive relief
              was appropriate. The court found that the potential
              harm to the environment from the placement of fill
              into high-value  waters would  be serious and
              irreversible.  In contrast, the court found that the
              harm to the USAGE and persons seeking to place
              fill for the construction of single family houses was
              mitigated by the availability of  individual § 404
              permits (which would require extra time) and other
              NWPs.   The  court   enjoined  USAGE  from
              accepting PCN's pursuant to NWP 29 after June
              30,  1998,  pending  compliance with  NEPA
              through  the issuance  of an environmental
              assessment that  adequately addresses the
              exclusion of high-value waters and the use of
              an acreage ceiling other than 0.5 acres.
                                             22

-------
 Issue 15
Water Enforcement Division
ApriM999
       7.  District court holds that slip plowing
           and disking of delineated wetlands
           required § 404 permit:

Borden Ranch Partnership v. U.S. Army Corps of
Engineers, 1998 U.S. Dist. 1955 (E.D. Cal. Jun. 9,
1998).

The  District  Court for the Eastern  District  of
California denied summary judgment motions for
the plaintiff and granted, in part, summary judgment
for the United  States.   The central  issue  was
whether plaintiffs violated § 301 of the Clean Water
Act by their failure to obtain a § 404 permit from the
U.S.  Army Corps  of Engineers (USAGE) prior to
engaging in certain agricultural activities. In making
its  decision  regarding  the  cross-motions  for
summary judgment, the court ruled that USAGE
had  subject  matter jurisdiction  over  plaintiffs
activities, ruled out normal farming exemptions, and
determined that the recapture provision applied.

Plaintiffs owned and  operated a  farm, Borden
Ranch, in California, and failed to obtain a § 404
permit for deep   slip  plowing  and  disking  of
delineated wetlands. Plaintiffs claimed that their
plowing activities did not constitute the placement of
fill, and alternatively, argued that these activities
were exempted from § 404 permit requirements as
"normal farming activities." They also made facial
challenges against the applicable regulations, in
additional to commerce clause and due process
claims.

With  regard to the subject matter jurisdiction
under §  301, the court held that the plaintiffs
activities were within the jurisdiction of the
USAGE.  The court held that the  redeposit of
earth  can  constitute  the  "addition  of  a
pollutant" (Rvback v. EPA. 904 F.2d 1276,1285-
86 (9th Cir. 1990) and that the purpose of the
activity  was  irrelevant  (Minnehaha  Creek
Watershed Dist. v. Hoffman. 597 F.2d 617, 627
(8th Cir.  1978).  Therefore, the court granted the
United States' request for declaratory judgment
that the plaintiffs actions violated section 301.
              The court  denied plaintiffs contention that  the
              activities   were   exempt  from   the   permit
              requirements, under the exemption for  "normal
              farming  activities."   To  be  covered  by  the
              exemption,  the  activity must  be  part  of  an
              established farming activity, and not part of an effort
              to bring an area into farming.  The court rejected
              plaintiffs arguments about the historical agricultural
              uses  of the  property, and utilized  the plaintiffs
              admissions of the need to deep rip and disk the
              area before it would be suitable for its intended use.
              In its holding, the court deferred to the agency's
              construction  of the Clean  Water Act, finding  it
              reasonable and not in conflict with the expressed
              intent of Congress.   U.S.  v.  Riverside Bavview
              Homes. Inc..  474  U.S. 121, 131 (1985).

              The court held that plaintiffs  activities would be
              subject to the recapture provision of the CWA, 33
              U.S.C. 1344(f)(2). This provisions requires a permit
              for "any discharge of dredged or fill material into the
              navigable water incidental to any activity having as
              its purpose bringing an area into a use which it was
              not previously subject, where the flow or circulation
              of navigable waters may be impaired or the reach
              of such waters reduced."

              The court dismissed the facial challenges to the
              validity of the regulations, stating that the challenge
              was time-barred by a six year statute of limitations
              under the Administrative  Procedures Act. 28 U.S.C.
              2401 (a).   The court  also  held in  favor  of  the
              defendants on the plaintiffs due process claim.
              The court stated that the due process claims were
              based on notice issues, and could  be overcome
              where reasonable persons would have known that
              their conduct was at risk.

              Lastly, the court upheld the validity of the migratory
              bird rule, an EPA guideline adopted by the USAGE,
              used  to  determine  regulatory jurisdiction over
              isolated intrastate waters.  The court restated the
              holdings under Leslie Salt II, and III, to establish the
              validity of the rule in the  9th Circuit.
                                              23

-------
 Issue 15
Water Enforcement Division
ApriM999
       8.  District court holds that USAGE has
           authority to delegate § 404 permit
           issuance   authority  to  district
           engineers:

Johnson  v. U.S.  Army Corps of Engineers, 1998
U.S. Dist. LEXIS  8422 (D. MN June 1, 1998).

Plaintiffs,  who were farmers,  landowners, and
residents of Pennington County, Minnesota, sought
a  temporary restraining  order and  preliminary
injunction suspending the § 404 permits issued by
the U.S. Army Corps of Engineers (USAGE)  to the
Red  Lake  Band  of  Chippewa  Indians  and
Pennington County for the River Road Phase III
Project.  The  project involved  realignment and
reconstruction of  BIA Route 19. Pursuant to NEPA,
the Red  Lake Band of  Chippewa  Indians had
prepared  an  environmental   assessment  that
identified six alternatives, including  the preferred
alternative (No. 5), which involved filling 30 acres of
wetlands. Plaintiffs argued that the CWA did not
allow the Chief Engineer to delegate issuance of §
404 permits to the District Engineer, and that the
District Engineer's rejection of the alternatives 1-4
and 6 was "arbitrary, capricious and an abuse of
discretion."

Plaintiffs  argued that the decision in U.S. v. Mango,
1998 U.S. Dist.  LEXIS 2771 (N.D.N.Y. March 5,
1998) held that the Secretary of the Army did not
have authority to delegate § 404 permit issuance to
District Engineers. However, this court found the
Mango decision erroneous.  Rather, the  court
found that the CWA did not specifically address
subdelegation  of  §   404  permit  issuance
authority and that the USAGE'S construction of
the  statute  in  delegating  permit  issuance
authority by regulation was permissible.

Regarding  the substantive  basis for the  permit
decision,  plaintiffs argued that the purpose of the
project was to improve safety and traffic flow, and
that all of the alternatives achieved this objective,
including the off-reservation alternatives.   Thus,
plaintiffs  argued that USAGE'S characterization of
the purpose of the project as "bypassing existing
roads" including local traffic, was an "eleventh hour
              change"  improperly intended to reject the off-
              reservation alternatives. The court disagreed. The
              court found that  USAGE'S concern  about  easing
              conflicts with local traffic was expressed in the final
              draft EA and, thus,  was not a last minute change.
              Moreover, the court found that USAGE rejected the
              off-reservation  alternatives based on  safety and
              traffic concerns,  and that the USAGE'S decision
              making process evinced a thorough review of the
              matter.   Given that plaintiffs were not likely  to
              succeed on the merits, the court declined to issue
              injunctive relief.

                     9. District  court   denies   plaintiffs
                        summary judgment motion alleging
                        USAGE improperly granted City  of
                        Bessemer a permit for dredge and
                        fill  activities in violation of the CWA,
                        USACE  regulations,  and  other
                        statutory requirements:

              Waterworks and Sewer Board City of Birmingham
              v. U.S. Army Corps of Engineers, 1997 U.S.  Dist.
              LEXIS 17215 (N.D.  Al. Oct. 22, 1997).

              Plaintiff Water Works & Sewer Board of the City of
              Birmingham  challenged the  validity of a  permit
              issued by defendant U.S. Army Corps of Engineers
              (USACE) to the City of Bessemer. The City, which
              had been serviced by the plaintiff, desired to build
              its own water supply (including intake  structure),
              treatment and  distribution system.  The City had
              sought a permit under the  RHA and CWA § 404 to
              build an intake structure and associated pipeline.
              The USACE provided  public notice  of the permit
              application,  received  and  considered  public
              comments on the application, but denied a request
              from plaintiff to hold a  public hearing on the basis
              that a public hearing would not provide additional
              information  regarding the  final  decision.  On
              November 13, 1995, the USACE issued the permit
              to build an intake structure and associated pipeline.
              The permit was stayed temporarily around March 1,
              1996, but went back into effect on March 17, 1997.

              Following the USAGE'S denial of the public hearing
              plaintiff filed  suit contending, among other things
              that the permit was  improperly issued because:  1)
                                             24

-------
 Issue 15
Water Enforcement Division
ApriM999
the USAGE failed to hold a  public hearing in
violation  of USAGE  regulations,  the  statutes
governing the USAGE'S permitting process, and the
Due Process clause of the Fifth Amendment; 2) the
USAGE  failed  to  adequately  consider  the
substantial adverse effects of the permitted activity
on the public interest;  3) the USAGE erroneously
failed to require preparation of an environmental
impact statement  in  violation  of  the  National
Environmental  Policy Act,  42  U.S.C. § 4321, et
seq.; and 4) the USAGE permit would not comply
with  the   Environmental   Protection  Agency's
Guidelines for  Specification of Disposal Sites for
Dredged  or Fill Material, 40 C.F.R § 230 et seq.
The City of Bessemer and the USAGE filed motions
for  summary judgment and Water Works filed a
cross motion for summary judgment and a motion
for limited discovery and a hearing.

With respect to plaintiff's claim that the USAGE
failed to  comply with its permitting procedures,
following  a detailed review of the regulations and
case law the court  reasoned that the USAGE had
correctly concluded that plaintiffs written submittals
adequately presented the issues of concern and a
public hearing was not needed for clarification. The
court held that in denying  the request for a
public hearing  the USAGE  acted within its
appropriate range of its  discretion  and such
denial was neither arbitrary nor capricious.

Regarding whether the USAGE'S refusal to hold a
public  hearing   violated  the  Administrative
Procedures Act (APA), the court concluded that the
denial of the hearing violated neither §  5 of the
APA, § 10 of the Rivers and Harbor Act of 1899
(RHA), or § 404 of the Clean Water Act (CWA).
The court observed that, "[a] federal agency is not
required to conduct public hearings before making
a threshold determination as to the need for an EIS
so long as  members of the public are given the
opportunity to submit facts which might bear upon
the agency decision." Sierra Club v. Alexander, 484
F.Supp. 455, 471 (N.D.N.Y. 1980).  Further, the
court   noted  that  the  USAGE'S   procedures
adequately  complied with CWA § 1344(a),  which
mandates an "opportunity for public hearings." The
court observed that if the USAGE determined that
              it had the information necessary to reach a decision
              and there was "no valid interest to be served by a
              hearing, the USAGE had the discretion not to hold
              one.

              With respect to plaintiff's request for hearings and
              discovery, the court stated that "[T]he focal point for
              judicial review of an administrative agency's action
              should be the administrative  record."   Preserve
              Endangered Areas of Cobb's History, Inc. v. U.S.
              Army Corps of Engineers, 87 F.3d 1242,1246 (11th
              Cir.  1996).   The court noted that where an
              administrative agency fails to adequately explain its
              decision the proper course of action is to remand
              the matter to the agency for additional investigation
              or explanation.

              Plaintiff asserted  that  the  Corps'  public interest
              review was intended to be a "broad review"  which
              must  include not only  the  structures  affecting
              navigable waters but also those structures that help
              fulfill  the  purpose of  the project  such as the
              treatment  plant  and  pipeline.   In a  detailed
              analysis relying  in part on two  Circuit Court
              cases (see,  Winnebago Tribe of Nebraska v.
              Ray. 621 F.2d 269 (8th Cir. 1980), and  Save the
              Bay. Inc. v. U.S. Army Corps of Engineers. 610
              F.2d 322 (5th Cir. 1980)), the court held that the
              water treatment  plant and the aspects of the
              project not related  to the intake  structure and
              pipeline crossings were not within the scope of
              the USACE's jurisdiction  in undertaking the
              public interest review.

              Plaintiff contended  that  in  failing  to  consider
              impacts of the water withdrawals on human uses of
              the river the  USAGE  conducted an inadequate
              CWA § 404(b)(1) analysis, and that the USAGE
              failed to make an appropriate evaluation of the
              alternatives to a "dredge and fill" action as required
              under CWA § 404(b)(2). The court pointed out that
              the governing regulation, 40 C.F.R. § 230.50, did
              not require the USAGE to consider the impacts of
              water withdrawal on water supply in its § 404(b)(1)
              review,  only impacts  on water  supply  from the
              addition of fill into  the water.  The court also
              rejected plaintiff's assertion that  the   no-action
              alternative of purchasing water from plaintiff  was a
                                              25

-------
 Issue 15
Water Enforcement Division
ApriM999
practicable alternative in line with § 404(b)(2). As
the court noted, the purpose of the project was to
sever the City's reliance on plaintiff water treatment
and distribution system.

Finally, plaintiff  contended that USAGE failed to
conduct  a  proper  alternative  analysis   in  its
environmental assessment.  As the court pointed
out, the arbitrary and capricious standard was the
proper one for  review of NEPA determinations.
Since the  USAGE had  reasonably  considered
alternatives in its decision making, the court found
no bases upon  which to set aside the USAGE'S
decision.

       10.   District  court  holds  that soil
             redeposited  through  "incidental
             fallback" constitutes a discharge
             of a pollutant for purposes of the
             Clean Water Act:

U.S. v. Feinstein. Case No. 96-232-CIV-FTM-24
(D), Decided June 12, 1998.

The Feinstein's contracted in the 1980's to develop
248 acres of land in Fort Meyers, Florida. The site
was cleared, grubbed, and graded. In June of 1992
the U.S.  Corps of Engineers  (USAGE) issued  a
cease and desist order prohibiting the discharge of
pollutants into the waters  of the United States
located on the property. The Government initiated
an action in June of 1996 seeking injunctive relief,
restoration of the polluted waters and civil penalties.
The Feinstein's,  citing American Mining Cong, v.
U.S. Army  Corps  of  Eng'rs,  argued that soil
redeposited  through "incidental fallback" did not
constitute the addition of a pollutant under the
CWA.

The  court observed  that  the Supreme  Court
explained in Chevron,  U.S.A.,  Inc.   v.  Natural
Resources Defense Council, 467 U.S. 837 (1984)
that if the statute is silent or ambiguous with respect
to the specific issue, the court must decide whether
the  agency's  interpretation   is  based   on  a
permissible reading of the statute. Here, the court
determined that Congress did not directly address
the question of  whether  incidental  fallback is
              discharge of a pollutant under the CWA. Thus, the
              court deferred to the USAGE'S interpretation of the
              statute.   The court  concluded that the USAGE'S
              construction of  the  CWA was permissible.  The
              court reasoned that case law has established that
              the "addition"  of  a  pollutant  to U.S.  waters
              encompasses  "redeposit,"  and  that incidental
              fallback is  "essentially minimal  redeposit."  The
              court further reasoned that because the CWA does
              not draw lines based on the amount of pollutant
              added  (redeposited) it did not make sense to
              prohibit  "redeposit",  but allow incidental fallback.
              The court found fault with  the American Mining
              Cong, decision because that court, faced with the
              incidental fallback issue,  interpreted the CWA
              rather than deferring to the interpretation of the
              USAGE and the EPA.

              The court concluded that the property contained
              wetlands because it had both the characteristic
              vegetation  and  characteristic  hydrology  of  a
              wetland.  The wetlands satisfied the jurisdictional
              requirement by being "hydrologically connected to
              and in a continuum with other waters of the United
              States," and thus "adjacent" to them.

                     11.   Court  of   Claims   holds  that
                           wetlands   determination  and
                           delineation   themselves   are
                           insufficient   to  constitute   a
                           compensable  taking  under the
                           Fifth Amendment:

              Robbins v.  The United States, 1998 U.S.  Claims
              LEXIS 32 (Feb. 201998).

              Plaintiffs contracted to sell 38 acres of  land in
              Tennessee to a buyer who intended to develop it.
              After the U.S. Army  Corps of Engineers (USAGE)
              determined that the property contained jurisdictional
              wetlands, the contract was canceled.  Plaintiffs
              never submitted a  § 404  permit  application to
              develop the wetlands. Plaintiffs filed a complaint to
              recover damages from the USAGE'S alleged taking
              of the land sale contract or alternatively, the taking
              of the property without compensation in violation of
              the Fifth Amendment.
                                              26

-------
 Issue 15
Water Enforcement Division
ApriM999
The court analyzed the takings issue via the "two-
tiered" inquiry outlined in M & J Coal Co. v. United
States. 47  F.3d  1148,  1153-54 (Fed. Cir. 1995).
First,  the court assesses the nature of the land
owner's property interest to determine whether a
compensable interests exists.  Second, after the
property   interest   is   established,  the  court
determines  whether  the  government's  action
constitutes  a  compensable  taking of  private
property  for a  public purpose. The court added a
third factor to its analysis, the extent to  which the
government  action   interferes   with  plaintiffs'
reasonable investment-backed expectations, Penn
Central Transp.  Co. v. New York City,  438 U.S.
104,  124  (1978).   The court  explained  that
"government  action   that   merely   frustrates
expectations under a contract does not constitute a
taking."  Thus, the  court found that the  wetland
determination  and delineation themselves were
insufficient to constitute a compensable taking as
they did not supply the requisite government action.
Furthermore, the court noted that the possibility that
the USAGE still could have granted plaintiffs a
permit precluded the wetland determination from
constituting a taking.

       12.    District court holds the U.S. Army
              Corps   of  Engineers  has
             jurisdiction   over   isolated
              intrastate waters that provide a
              habitat for migratory birds even if
             the particular birds on the site do
              not substantially affect interstate
              commerce:

Solid  Waste Agency of Northern Cook  County v.
U.S. Army Corps of Engineers,  1998  U.S. Dist.
LEXIS 3994 (D.N. IL E, March 25,  1998).

The Corps initially determined that the property did
not contain any wetlands. The Corps later asserted
jurisdiction  over  the SWANCC property because
migratory birds had  been observed there  and the
waters were used or could be used as a  habitat by
migratory birds. Two subsequent applications for a
section 404 permit were denied.
              The court does not agree with the 4th Circuit, in
              U.S. v. Wilson. 133 F.3d 251 (4th Cir.  1997), that
              the Lopez  decision puts regulation of intrastate
              migratory bird habitats beyond  the reach  of  the
              commerce clause.  Migratory birds are  considered
              proper subjects for regulation under the commerce
              clause.  Isolated  wetlands  provide  habitat  to
              migratory birds whose existence supports interstate
              commerce.   The  migratory bird  rule  is  a valid
              application  of the CWA because  the scope of
              jurisdiction  under  the  CWA  tracks that  of  the
              commerce clause and the commerce clause allows
              regulation of intrastate migratory bird habitats.

                      13.   District court reconsiders  ruling
                           on sidecasting in light of Wilson
                           and holds sidecasting constitutes
                           does not discharge for purposes
                           of CWA:

              U.S. v. Deaton, Action No. MJG-95-2140 (Jun.  23,
              1998).

              The United  States  brought  an  action  against
              defendants James and Rebecca Deaton under §§
              301 (a)  and  404  of  the  CWA  that asserted
              defendants  had failed  to  obtain  a  permit  for
              excavating  a  drainage ditch within a wetland area
              and "sidecasting" the excavated material such that
              is  was deposited  next to the  ditch  within  the
              wetland. In a Corrected Memorandum and Order
              issued September 22,1997, the court had held that
              defendants' sidecasting constituted the discharge of
              pollutants into water of the U.S. (deemed adjacent
              wetlands) in violation of the CWA.  In  this action,
              the court reconsidered that outcome in light of the
              Fourth Circuit's decision in U.S. v. Wilson, 133 F.3d
              251 (4th Cir. 1997).

              Defendants argued that the court lacked jurisdiction
              over the Deaton's property and that the sidecasting
              did not constitute the discharge of a pollutant into
              waters  of the U.S.  The court focused  on  the
              sidecasting   issue  and  did  not  address   the
              jurisdictional question. The court observed that in
              Wilson the Fourth Circuit held that sidecasting (i.e.,
              the redepositing of soils excavated from a wetland
              next to the  ditch  being  created but  within  the
                                              27

-------
 Issue 15
Water Enforcement Division
ApriM999
wetland) did not involve the addition of pollutants to
the wetland,  and therefore did not constitute a
"discharge," as that term is defined under the CWA.
Given  this precedent,  this court stated  it was
obliged to predict that the Fourth Circuit would hold
that sidecasting did  not constitute a discharge of
pollutants and, thus, ruled that the  sidecasting in
this case did not constitute a prohibited discharge.
Despite this outcome, the court observed because
two of the three judges that heard Wilson  did not
join  that  portion of  the Wilson  opinion  that
discussed sidecasting, the issue may not be well
settled in the Fourth Circuit.  Moreover, the court
restated its belief that the reasoning and decisions
of the  Fifth, Ninth, and Eleventh Circuits  on this
issue,  which have  held  that  sidecasting does
constitute discharge, remained more compelling in
the court's view. Nevertheless, the court vacated it
prior decision to  extent it held that  sidecasting
constituted discharge and  granted defendant's
motion for summary  judgment.

       14.   District court holds that only EPA,
             not the USAGE,  has statutory
             authority under the CWA to bring
             a  civil enforcement  action  to
             enforce violations of § 404 where
             no § 404 permit has been issued:

U.S. v. Hallmark Construction Company, 1998 U.S.
Dist. LEXIS 11892 (D. Illinois, July 23,  1998).

Plaintiff the United States sued defendant Hallmark
Construction  Company for filling what the  U.S.
Army Corps of Engineers (USAGE) deemed a five
acre  isolated wetland  (Area  B)  without first
obtaining authorization under § 404 of the CWA.
Plaintiff sought restoration or mitigation, whereas
defendant argued that the U.S. lacked jurisdiction
over Area B, the USAGE was not a proper plaintiff,
and  the  claim was barred  by the statute  of
limitations.

The court's decision focused on  propriety of the
USAGE,  and the U.S. as its representative, as a
plaintiff. Defendant argued that under the CWA the
USAGE had authority to issue and enforce § 404
permits, including the authority to bring a civil action
              for violations of § 404 permits, but did not have
              authority to seek civil penalties for a "permitless"
              discharge. Under § 319(b), defendant argued that
              such authority resides solely with EPA. Defendant
              added that the 1989 MOU  between EPA and the
              USAGE improperly allowed USAGE to assume
              enforcement authority  for violations of §  404
              restrictions. Upon examination of CWA §§1319
              and 1344, the court agreed, and held that under
              these sections of the CWA Congress has not
              delegated authority to the USAGE to commence
              a  civil  action  to enforce   dredge and  fill
              violations where such violations occur without
              a permit.  The court observed  that only Congress
              could delegate such enforcement authority to the
              USAGE, and Congress had not done so. The court
              acknowledged  that the sole judicial decision  to
              examine   this   issue  reached   the  opposite
              conclusion, however, the court found that decision
              did so without citing any authority.  Relying on the
              language  of the CWA, this  court declined  to
              "reallocate the  statute's  express  delegation  of
              enforcement authority."  Based on this holding, the
              court dismissed  the  complaint and declined  to
              address the remaining arguments.

              [Note: The U.S. moved for reconsideration and on
              September 9,  1998, this court vacated the above
              decision and held that § 404 does grant USAGE
              authority  to bring  an  enforcement  action   in
              instances of a  permitless discharge, and that the
              U.S.  was a proper party plaintiff. U.S. v. Hallmark,
              14 F. Supp. 2d 1065 (N.D. II. Sept. 9, 1998)].

                     15.   District court holds that USAGE
                           has authority under CWA to bring
                           an   enforcement  action   in
                           instances  of  a  permitless
                           discharge   of  dredge  and  fill
                           materials into waters of U.S., and
                           sustains application of migratory
                           bird  rule to isolated intrastate
                           wetlands:

              U.S.  v.  Hallmark Construction Company, 14  F.
              Supp. 2d 1065  (N.D. II. Sept. 9, 1998).
                                             28

-------
 Issue 15
Water Enforcement Division
ApriM999
Plaintiff the United States sued defendant Hallmark
Construction  Company for filling  what the U.S.
Army Corps of Engineers (USAGE) deemed a five
acre isolated intrastate wetland (Area B) without
first  obtaining authorization  under § 404  of the
CWA.   Plaintiff sought restoration or mitigation,
whereas defendant argued that the U.S.  lacked
jurisdiction over Area B,  the USAGE  was not a
proper plaintiff, and the claim was barred  by the
statute of limitations.  In a prior decision, this court
held that only EPA, not the USAGE, had statutory
authority  under  the  CWA to  bring  a  civil
enforcement action to enforce violations of § 404
where  no § 404 permit had been issued.  In its
initial decision, the court  found that the U.S. (as
representative for USAGE) was not a proper plaintiff
and dismissed plaintiff's suit.  1998 U.S. Dist. Lexis
11892(N.D. II. Jul. 23, 1998). The U.S. moved for
reconsideration of the July 23rd decision, and the
court considered plaintiffs jurisdictional and statute
of limitations arguments.

On reconsideration the court vacated its earlier
decision and held that § 404 does grant USAGE
authority to bring an  enforcement action in
instances  of a permitless discharge, and that
the U.S. was a proper party plaintiff.  The court
stated that under § 404(s)(3), USAGE clearly could
bring a civil enforcement action in instances where
it could issue a compliance order under § 404(s)(1).
The  court then observed that, under the CWA, the
USAGE retained  the  authority it is  was granted
under the Rivers  Act to issue permits  for dredge
and  fill activities.  In addition, the  court observed
that CWA § 404 provided the USAGE with authority
to issue permits for discharges of dredge and fill
material into navigable waters. The court reasoned
that  such  power  to  permit  these activities  and
materials  implied  authority  to exert control over
them.  The court  noted that the  USAGE currently
has  authority over  dredge  and  fill  discharge
activities that may be used in non-permitting ways
(e.g., authority to issue cease and desist orders for
unauthorized activity in areas under its control, see,
33 C.F.R. § 209.120(g)(12)(l)). Given all this, the
court stated that "[i]f the Corps has permit control
over wetlands areas  to ensure their protection, it
most certainly has the power  to  stop  unlawful
              permitless activity that endangers navigable waters.
              The authority to issue cease and desist order is
              inherent in its control of discharge into navigable
              waters."

              As  for plaintiffs argument that USAGE lacked
              jurisdiction over Area B because the USAGE'S
              "migratory  bird  rule" (33  C.F.R.  § 328.3(a)(3))
              exceeded the limits of Commerce Clause authority,
              the court, in an additional memorandum and order,
              dismissed  defendant's   motion  for  summary
              judgement. Defendant asserted that the migratory
              bird  rule  exceeded the  authority  provided to
              Congress under the Commerce Clause,  and that
              the leading Seventh Circuit case on this  issue,
              Hoffman  Homes. Inc.. v. EPA.  999 F.2d  256 (7th
              Cir. 1993)  (Hoffman II)  (migratory bird  rule and
              EPA's regulation of isolated wetlands did not violate
              the Commerce  Clause)  should be reexamined
              subsequent to U.S. v. Lopez, 514 U.S. 549 (1995)
              (federal  law  imposing   criminal  sanctions  for
              possession of  handguns  in local school  zones
              exceeded Commerce Clause authority). This court
              disagreed and stated that in Hoffman //the Seventh
              Circuit explicitly recognized that the cumulative loss
              of wetland habitats had reduced the population of
              many bird species  and had impaired the  ability of
              people to hunt,  trap, and observe those migratory
              birds, thereby affecting commerce. In addition, the
              court  stated it  was not clear  that Lopez  would
              dictate a different result in Hoffman II. Finally, the
              court found that Hoffman II implied that the USAGE
              had not exceeded its CWA authority by regulating
              intrastate  isolated  wetlands,  since  that   court
              ultimately applied the USAGE regulatory definition.
              Thus, based on  the law of the circuit, the court held
              that the USAGE did not exceed its authority under
              the Commerce  Clause or the CWA by regulating
              intrastate isolated wetlands as "waters of the U.S."
              However, the court found that genuine evidentiary
              issues remained as to  whether Area B was a
              jurisdictional  "farmed   wetland"  or   a   non-
              jurisdictional "prior converted cropland."

                     16.   District court holds that USAGE
                           cancellation  of application for
                           coverage under nationwide § 404
                           permit  based   on  applicant's
                                              29

-------
 Issue 15
Water Enforcement Division
ApriM999
                 inaction  and   issuance  of
                 cease and desist order for
                 potential CWA/RHA violations
                 were not final agency actions
                 under the APA:

Inn of Daphne, Inc., v. The United States of
America. 1998  U.S. Dist. LEXIS 13991  (S.D. Al.
Aug. 26, 1998).

Plaintiffs  brought an action  seeking declaratory
judgement that plaintiff was entitled to build a boat
ramp that extended off plaintiffs'  property under
nationwide permit 36 and that the U.S. Army Corps
of Engineers'  (USAGE) denial  of permission to
repair  a  failed retaining wall under  nationwide
permit 3 was arbitrary and capricious. The United
States moved for  judgement on  the pleadings,
arguing that the USAGE had not taken final agency
action.

Due to concern about prehistoric artifacts possibly
being on plaintiffs' property,  USAGE had denied
plaintiffs permission to rebuild the failed  retaining
wall  under  nationwide  permit 3 unless  plaintiffs
obtained  an archeological survey  of the  property
acceptable  to defendant and  the  State Historical
Preservation Officer.  Plaintiff failed to obtain such
a survey and the USAGE ultimately canceled the
application  for  coverage under  the  nationwide
permit based on plaintiffs' failure to respond to the
request for the survey.

The central issue was whether the USAGE'S
cancellation of the plaintiffs' application for
coverage under nationwide permit 3 constituted
final agency action. The court held that it did
not. The court cited the provisions of 5  U.S.C. §
704 and several case decisions,  including Bennett
v. Spear, 520 U.S. 154 (1997), in finding that in no
way could cancellation of plaintiffs' application for
coverage   under  the   nationwide  permit  "be
considered   'consummation  of   the  [Corps']
decisionmaking process'," since the decision to
cancel the application was not based on the merits,
but on plaintiffs' inaction, and plaintiffs still could
have applied for an individual  permit. In  addition,
the court found that no action by  USAGE carried
              any legal consequence, since plaintiffs had other
              legal options for permit coverage and the cease
              and  desist order merely informed plaintiffs that
              USAGE believed that jurisdiction existed.  The court
              concluded that as of the date the complaint was
              filed, the USAGE had neither "granted nor denied
              plaintiffs permission to repair the failed retaining
              wall, nor had they taken legal action to require the
              plaintiffs to abate the potential violations of the RHA
              and/or CWA via construction of a boat ramp into
              D'Olive Creek."  Having found  no  final  agency
              action, the  court dismissed the  action for lack of
              subject matter jurisdiction.

                      17.   District  court  finds  inadequate
                           subject matter jurisdiction where
                           plaintiff   challenged  USAGE'S
                           authority to require a dredge and
                           fill permit based on the fact that
                           USAGE had delegated authority to
                           issue such permits to the State of
                           Michigan:

              Charfoos and Co. v. West, 1998 U.S. Dist.  LEXIS
              7112 (ED.  Mich. 1998).

              Plaintiff Charfoos and Co., obtained a state permit
              to fill 43 acres  of wetlands and sought a  federal
              permit to  do  the  same,  while  simultaneously
              challenging the U.S. Corps of Engineers (USAGE)
              jurisdiction to require the federal permit. Plaintiffs
              asserted that  the  subject wetlands were not
              navigable  waters  and  were   not  adjacent to
              navigable waters, and therefore were subject only
              to the  State of Michigan's permit authority.  The
              USAGE had delegated authority to issue wetland
              permits to Michigan, with the exception  of waters
              used or susceptible to use in interstate commerce
              and  adjacent  wetlands.   The State  program
              operated pursuant to an MOA, which listed those
              waters  for which  permitting  authority was not
              delegated,  and provided for joint permitting of
              activities in such waters.  The defendant USAGE
              challenged the courts subject matter jurisdiction to
              hear the case, arguing that the court could not
              entertain a challenge to the USAGE'S jurisdiction
              over a specific wetland.
                                              30

-------
 Issue 15
Water Enforcement Division
ApriM999
In deciding this case, the court followed Southern
Ohio Coal v. Office of Surface Mining Reclamation
and Enforcement, 20 F.3d 1418  (6th Cir. 1994)
(district  court lacked jurisdiction  to  review pre-
enforcement action by EPA where delegated state
issued discharge permit for untreated mine water
and EPA threatened to issue compliance order if
discharge was not stopped).  The court observed
that the holding of Southern Ohio applied not
only to orders issued once a violation had been
identified,  but also  to the investigatory work
necessary to discover a  violation,  and  to
challenges to the jurisdiction of the oversight
agency to issue pre-enforcement orders. The
court observed that such a challenge, which the
court  viewed  as   analogous  to  plaintiffs
challenge here, was improper at this time. The
court also rejected plaintiffs claims that final agency
action had occurred, and found that judicial review
was not available  under the APA because under
Southern Ohio the Sixth Circuit had held that the
CWA precluded review of pre-enforcement actions.
The court also rejected plaintiff's  arguments that
they were only seeking to enforce their contractual
rights under the MOA. Finally, the court rejected
plaintiffs claim that under Leedom v Kvne, 358 U.S.
184 (1958), the court could review agency actions
that were '"in excess of its delegated  powers and
contrary to a specific [statutory] prohibition."' The
court  found that Leedom was  inapplicable here
because the USAGE had not acted in a manner
clearly '"outside of it delineated authority."'

        18.   District court upholds USAGE'S
             decision to allow coverage under
             nationwide permits where USAGE
             engaged  in  reasoned  decision
             making and plaintiff failed to offer
             contradictory evidence other than
             expert testimony:

Mylith   Park   Lot  Owners   Assoc.  v.  U.S.
Environmental Protection Agency, 1998 U.S. Dist.
LEXIS 3227 (Mar.  17, 1998).

Plaintiff Mylith Park Lot Owners Association sought
judicial review under the APA of the U.S. Army
              Corps of Engineers' (USAGE) decision to authorize
              construction of a berm and sewer line for a housing
              development pursuant to nationwide permits 12 and
              26,  rather than subject to  individual permits as
              authorized under 33 U.S.C. § 1344.  In a  prior
              decision issued on November 14,1997,  Magistrate
              Judge Bobrick of this court issued a  report and
              recommendations  that  defendant's motion for
              summary judgment be granted and plaintiff's motion
              for summary judgment be denied.  Plaintiffs sought
              an  extension  to   file  objections   to  these
              recommendations, but never filed those objections.
              In this   action, the  district court  reviewed  the
              November 14,1997 recommendations to determine
              whether they were arbitrary and capricious or the
              result of an abuse of discretion, in violation of the
              APA.

              Plaintiffs  argued  that the  USAGE'S issuance of
              general permit coverage for the berm  and sewer
              line was arbitrary and capricious because USAGE
              had  not engaged in a meaningful evaluation of the
              data  and  scientific evidence,  had  relied on
              inaccurate  or  unscientific   environmental
              evaluations,  had  disregarded  the  opinions  of
              plaintiff's expert, did not consider local impacts on
              wildlife, and had ignored the amount of wetlands
              that would be impacted by the project.  The court
              first held,  based on  plaintiffs failure to file
              objections  to  the   November  14,   1997
              recommendations, that plaintiffs had  waived
              their right to appeal those recommendations.
              The court then held that the November 14,1997
              recommendations contained no error of law and
              that  the findings  of fact upon which  the
              recommendations  were based had  adequate
              support in the  record.  The court,  therefore,
              granted  defendant's  motion  for  summary
              judgement.

              The court stated that plaintiffs had provided little, if
              any, evidence that challenged the validity of the
              scientific data used by the USAGE to formulate its
              decision.  The court noted that USAGE required the
              permittee to notify  USAGE  prior  to  filling  any
              wetlands so that it  could  conduct  a  review of
              whether an individual permit was warranted, and
              that the  USAGE concluded  that the project would
                                             31

-------
 Issue 15
Water Enforcement Division
ApriM999
"not cause more than a minimal adverse impact on
the wetlands."  The court also  pointed out that
based on the highly deferential standard of review
applied to the USAGE'S decision, plaintiffs expert's
opinion, for which little or no foundation and basis
had been provided,  was irrelevant as a matter of
law.  The  court further  observed that the record
demonstrated that USAGE had considered potential
impacts on local plant life as well as threatened and
endangered species,  and  had  considered  the
berms potential effect on the wetland, as well as on
flooding and groundwater. Given how USAGE had
proceeded and the fact that the project would only
adversely affect  0.9 acres of wetland, the court
found that USAGE'S decision was "not arbitrary and
capricious nor the result of an abuse of discretion."

        19.   Court of Claims holds that under
             ripeness  doctrine  plaintiff's
             takings   claim   accrued   for
             purposes of applying the statute
             of  limitations   when   permit
             application  was  denied  on the
             merits and in such manner as to
             suggest  further efforts would be
             futile:

Cristina Investment Corp. v. United States, 40 Fed
Cl. 571 (1998).

Plaintiffs Cristina Investment Corp., and  Cris
Realms Inc., broughtaclaim on February21,1995,
against the U.S. Army Corps of Engineers (USAGE)
asserting that USAGE'S selection of an alignment
for a government levee proscribed the development
of plaintiff's wetland property and constituted  a
taking of such property, which should have been
compensated in the amount of $ 2,156,000.  On
September  21,  1979,  USAGE  had  denied  a
separate § 404 permit application (that of Bayou
des Families Development Corp., or BDF) for  a
private levee in a different alignment that would
have allowed plaintiffs development.

Defendant argued that all events fixing liability had
occurred by September 21,  1979, and, therefore,
plaintiff's claim was barred by the six-year statute of
limitation (28 U.S.C. § 2501). Plaintiffs argued that,
              notwithstanding the  USAGE'S denial  of BDF's
              permit application on September 21, 1979, legal
              challenges to the denial of the BDF permit and local
              political debate suggested the possibility that either
              BDF or  USAGE would  locate a levee such that
              plaintiffs  development could proceed.   Plaintiffs
              argued by analogy to the Dickinson stabilization
              principle, which provides that a takings claim that
              arises from a continuing physical process does not
              accrue until  the physical process  has  stabilized,
              (See, U.S. v. Dickinson. 331 U.S. 745, 749 (1947)).
              Under this principle plaintiff maintained that their
              claim  did not  accrue until  the  political  process
              affecting location of the levee had stabilized, which
              was in either 1989 or 1990. The court observed
              that the Dickinson principle only applied to takings
              that involved a continuous physical process and,
              therefore, it was  not the  correct  analytical
              framework  within  which to  consider  plaintiffs'
              claims.  Rather, the court stated that the ripeness
              doctrine was appropriate framework within which to
              consider plaintiffs' claims.

              Underthe ripeness doctrine, the court observed
              that a government denial of a permit would be
              considered final,  and any related takings would
              accrue, if the property owner had made a proper
              permit application and such application was
              denied on the merits and  in  such a way as to
              suggest  that reapplication for a  modified plan
              would be futile.   Applying these criteria to  the
              claims presented  by plaintiff Cristina Investment
              Corp., the court found that the USAGE'S September
              21,  1979 denial of BDF's permit  application was
              final because USAGE'S decision had addressed the
              merits of BDF's proposal and had rejected it on
              ecological grounds, including the "unchanging fact
              that the  wetlands at issue here  were within a
              protected [national park] zone." Based on this, the
              court  found  that  plaintiff's  claim  accrued as  of
              September 21, 1979 and held that plaintiff's claim
              was barred by the six-year statute of limitation. The
              court denied plaintiff Cris Realms claim based on
              the fact that it did not own the property in question
              as of the  date of the government's final action.
                                              32

-------
 Issue 15
Water Enforcement Division
ApriM999
    G. Citizen Suits

       1.  Jurisdiction

           a. District court holds that EPA has
             no mandatory duty to  oppose a
             State's  CAFO  environmental
             strategy that  may not be fully
             consistent   with   CWA
             requirements  where  application
             of the  strategy has  not  been
             shown to result in a  violation of
             CWA standards or orders, nor has
             the  strategy   been  shown  to
             effectuate  a  change  in  water
             quality standards:

Cross  Timbers  Concerned   Citizens  v.  Jane
Saginaw, Regional Administrator, U.S.  EPA, Region
IV: and Paul Johnson, Chief,  U.S. Department of
Agriculture, 1997  U.S. Dist.  Lexis  20346  (N.D.
Texas, December 16, 1997).

Plaintiffs  sought relief against the U.S. EPA and
U.S. Department of Agriculture, Natural Resource
Conservation Service (NRCS), for allegedly failing
to  take  action  regarding  a  Texas strategy
developed  by  the  Tarleton Institute for Applied
Environmental  Research (TIAER) that addressed
concentrated animal feeding operations (CAFOs)
as non-point source discharges.  Plaintiffs alleged
that the strategy violated the CWA, and that EPA
both failed to act  regarding the strategy and
condoned it by providing grants to  support the
strategy.  Defendants argued that the  court had no
jurisdiction to hear the claims brought against EPA
or NRCS under the Clean Water Act.

Plaintiff asserted jurisdiction under the citizen suit
provisions of the CWA (33 U.S.C. §  1365(a)), as
well as under the APA (review of final agency action
to  determine  whether it  was arbitrary  and
capricious). Under the citizen suit provisions of the
CWA, plaintiffs argued that EPA had  a mandatory
duty to oppose the State's environmental strategy
which did not comply with the standard or permit
that  EPA had  already required under  the CWA.
The  court  disagreed.  The court  found that
              plaintiffs lacked jurisdiction under § 1365(a)(1)
              because the plaintiffs: 1) had not asserted any
              violation of an effluent standard or limitation or
              of an order of EPA or a state, as required by §
              1365(a)(1), and 2) because § 1365(a)(1) could not
              be read as providing a  basis for a citizen  suit
              against the  EPA as  adminstrator  of the CWA
              because to  do so would render  § 1365(a)(2)
              meaningless.  (See,  Bennet v. Spear. 520 U.S.
              154 (1997)).  The court also found that plaintiffs
              lacked jurisdiction under § 1365(a)(2) because
              EPA was under no mandatory duty  to  act
              regarding the strategy  document.  The court
              stated  that  EPA had  fulfilled its  duty  under 33
              U.S.C.  § 1311(e) by having promulgated effluent
              limitations for feedlots (see, 40 C.F.R. § 412) and
              having applied those guidelines to CAFOs in Texas
              through a general CAFO permit issued in 1993.
              The court also examined whether any duty  was
              imposed under 33 U.S.C. § 1313, and found that
              plaintiff  had neither  argued that  the strategy
              document  constituted  a  change  in  state water
              quality  standards,  nor had plaintiffs taken the
              requisite actions to trigger  EPA's duty  to act on
              such changes, if indeed any changes had occurred.
              Thus, the court held that plaintiff's claim was not
              ripe  for  review.    The court  observed   that
              adjudication of these claims should be deferred until
              EPA had the opportunity to accomplish its duties
              and the plaintiff had the opportunity to clarify and
              finalize its case if EPA failed. The court also noted
              that this suit  appeared to  be  an  action  for
              enforcement, and that under well established Fifth
              Circuit  law,  "enforcement  decisions are  strictly
              discretionary with the EPA."

              With regard to plaintiff's APA argument, the court
              held that it may not review the agency action in
              question  for  arbitrariness  or   capriciousness
              because it did not constitute a "final agency action"
              as required under the APA.

                        b. District court holds USACE is not
                           a proper defendant for an action
                           under CWA §505(a)(1):
                                             33

-------
 Issue 15
Water Enforcement Division
ApriM999
Stewart v. Potts, U.S. Army Corps of Engineers,
1997 U.S. Dist. LEXIS 17388 (S.D. Tex. Oct. 30
1997).

Plaintiffs S. Stewart, the Houston Audubon Society,
and the Sierra Club, brought suit against the District
Engineer for the U.S. Army  Corps of Engineers
(USAGE), the Secretary of the Army (collectively
federal defendants),  and the  City and  Mayor of
Lake Jackson.  The  suit sought relief under the
Administrative  Procedure Act  (APA), the Clean
Water  Act (CWA) and the Declaratory Judgment
Act (DJA) for violations of National Environmental
Policy Act (NEPA) and the CWA. The claims were
based on the USAGE'S issuance of a CWA § 404
permit  to  the City of Lake Jackson.   Plaintiffs
alleged that in considering the permit application
and  issuing  the §  404 permit,  the  USAGE
improperly eliminated a substantial area within the
proposed golf course site from classification and
consideration as wetlands.

The federal  defendants filed a partial motion to
dismiss the  claims that arose under the CWA.
Defendants argued that under  CWA § 505(a)(1),
the CWA citizen  suit provisions authorized suit
against regulated  parties, but not  against  the
USAGE or EPA. The  court agreed, and held that
plaintiffs could not maintain a suit against the
USAGE under  § 505(a)(1) of the CWA for an
alleged violation of USAGE'S duty to administer
the § 404 permit program.  The court observed
that the USAGE was not a proper defendant to an
action  under 505(a)(1).  (See,  Bennett v. Spear,
520, U.S., 154, 117S. Ct. 1154, 137 L Ed. 2d 281
(1997)  (where a provision of the ESA analogous to
the citizen suit provision of the CWA was held to
only allow civil actions against regulated parties)).
The court granted the federal defendant's motion to
dismiss the CWA claims.

The federal defendants also argued that plaintiffs
could not bring their claims  under the  federal
mandamus provision, 28 U.S.C. § 1361, and, again,
the court agreed.   The  court  found  that  the
mandamus  provisions   applied  "only  where
government officials clearly have failed to perform
non-discretionary duties." The court observed that
              although the USAGE'S decision  regarding permit
              issuance  must follow  proper  procedures,  that
              decision was entitled to deference. Thus, the court
              held that defendants owed no duty to the plaintiffs
              that would have provided for review of the plaintiff's
              claims  under the Mandamus Act.  These claims
              were also dismissed.

              Although the court dismissed plaintiff's claims under
              the Clean Water and Mandamus Acts, the court
              found that plaintiff's claims under the APA could
              properly be brought.   The court instructed  the
              parties  to   file   summary  judgment   motions
              addressing  plaintiff's APA claims.

              The City of  Lake Jackson filed a motion to dismiss
              the complaint in its entirety.  The City argued that
              plaintiff's APA  and NEPA claims against the City
              should have been dismissed because the City was
              a  non-federal  entity.   The  court  agreed  and
              dismissed these claims. With regard to the CWA
              claims, the City argued that plaintiff's  had  not
              alleged the City was  in violation of an effluent
              standard or order and, again, the court agreed and
              found that the plaintiffs had failed to state a claim
              against the City for violation  of the CWA (i.e.,
              plaintiffs had failed to plead a prima facie case for
              violation of the CWA).  Finally,  with respect to
              plaintiff's request for a declaratory judgment stating
              that the City would have been in violation of the
              CWA if the City had attempted  to build  the golf
              course, the court found  that  the  Declaratory
              Judgment Act  did not expand the jurisdiction of
              federal  courts,   and   since  plaintiffs   lacked
              jurisdiction under the CWA, they had no  basis to
              seek declaratory judgment.  The court dismissed
              these claims as well.

                         c. District court holds that exercise
                           of EPA  Adminstrator's authority
                           to investigate citizen complaints
                           and to make findings relative to
                           these complaints is discretionary,
                           not mandatory:

              Weatherby   Lake   Improvement  Company   v.
              Browner.  No. 96-115-CV-W-8 (W.D. Mo. Aug. 17,
              1997).
                                              34

-------
 Issue 15
Water Enforcement Division
ApriM999
Plaintiff, Weatherby Lake Improvement Company,
brought a citizen suit alleging that developers either
discharged pollutants into the  Weatherby  Lake
watershed or failed to install and maintain proper
erosion and sedimentation controls.  In addition,
plaintiff sued the EPA Adminstrator for allegedly
failing  to  perform  the  nondiscretionary  act of
withdrawing approval of the state NPDES permitting
program  where  it was  not being  administered
according to the CWA requirements pursuant to 33
U.S.C. § 1251 et seq. The court found that EPA's
authority to investigate citizen complaints and
to make findings of violations, which would
then force EPA to withdraw state authority to
administer   a  state  NPDES  program,  is
discretionary,  not   mandatory.    The   court
explained  that plaintiff  could  petition  EPA to
commence proceedings  to withdraw an approved
NPDES program, or it may maintain suit against
those  defendants  allegedly  violating   CWA
requirements.  However, plaintiff failed to state a
claim  against EPA upon  which relief could be
granted and failed to demonstrate that the  court
had subject matter jurisdiction over its claim against
the EPA.  Accordingly, the court granted defendant
Browner's motion to dismiss the  claims against
EPA.

           d. District court holds that plaintiffs'
             citizen suit seeking civil penalties
             was moot where injunctive relief
             had   been   granted  and   no
             continuing   violations   were
             alleged, since civil penalty would
             not redress plaintiffs injury:

Roland Dubois v. U.S. Department of Agriculture,
1998  U.S. Dist. LEXIS 15198 (D.  N.H. Sept. 30,
1998).

Plaintiffs brought a citizen suit that sought injunctive
relief  as well as  to compel  defendant,  Loon
Mountain  Recreation Corporation,  to  pay  civil
penalties resulting from violations of the  Clean
Water Act.  The initial disposition of this case had
been  appealed to the First Circuit and remanded
from that court with instructions for the district court
to grant injunctive relief, which was in fact granted.
              The remaining issue before the district court was
              whether civil penalties should be assessed against
              Loon for past violations.  Loon moved to dismiss in
              light of the fact that an  injunction was already in
              place  and that plaintiff's civil claim did not present
              a justiciable case.

              The district court examined the issues of standing
              and mootness in the context of Steel Co. v. Citizens
              for a  Better Env't.  140 L.Ed.  2d 210, 118 S.  Ct.
              1003  (1998), which held that a plaintiff seeking
              declarative and injunctive relief for past violations of
              EPCRA lacked standing since such remedies would
              not redress any legitimate Article III injury. Here,
              the court found that the holding of Steel Co., was
              equally  applicable  to citizen  suits seeking  civil
              penalties under the CWA since both require such
              penalties to be paid to the U.S. Treasury.  Plaintiffs
              argued  that  this  case  could  be distinguished
              because  they  had alleged  continuing violations.
              The court stated that even if  Steel Co., could be
              distinguished, plaintiffs claims  became moot when
              the court  issued  its injunction against further
              violations. The court observed that since plaintiffs
              had not alleged any violations of the terms of the
              injunction, nor offered evidence of any continuing
              violations, an award of  civil penalties would not
              deter further violations.  The court observed that
              since the CWA requires that civil penalties be
              paid  to  the  federal  government,   plaintiffs
              "deriving comfort and joy from the fact that the
              U.S. Treasury is not cheated, [did] not redress a
              cognizable injury under Article III."  Thus, the
              district court held  that  plaintiffs claim for  civil
              penalties was moot, regardless of whether they had
              standing to seek  such penalties when the suit was
              brought. The court granted Loon's partial motion to
              dismiss for lack of subject matter jurisdiction.

                     2.  Standing

                         a. Fifth  Circuit   holds   that,   in
                           determining  whether non-profit
                           corporation  has  members that
                           could  assert   standing  for
                           purposes  of  establishing
                           organization's   associational
                           standing, formal  membership  is
                                              35

-------
 Issue 15
Water Enforcement Division
ApriM999
                 not controlling where there is
                 sufficient   "indicia   of
                 membership":

Friends of the Earth v. Chevron Chemical, 129 F.3d
826(5thCir. 1997).

Plaintiffs  appellants  Friends  of the Earth  (FOE)
brought a citizen suit under the Clean Water Act
(CWA) against Chevron for violations of the terms
of Chevron's NPDES permit. The district court
dismissed the action for lack of subject  matter
jurisdiction,  having   found  that   FOE   lacked
associational standing because it had no members
under corporate law.  FOE's bylaws provided that
its membership requirements  were to be set by its
board of directors, but that board had never acted
to determine such requirements.  FOE appealed.

The appellate court first observed that the Supreme
Court  in   Hunt   v.   Washington  State  Apple
Advertising Commission, 432 U.S. 333, 97 S. Ct.
2434, 53  L. Ed. 2d 383 (1977) established that an
organization can  assert associational standing  to
represent the  interests  of its members where it
could show 1) one or  more the organization's
members would have standing on his or her own
right;  2) the interests the organization seeks  to
protect in the lawsuit are germane to the purposes
of the organization; and 3) the nature of the case
does not  require the participation of the individual
member  as plaintiffs.  The appellate court then
noted that the central issue in this appeal pertained
to the first criterion under Hunt, whether FOE had
members who would have been entitled to standing
on their own right.

The  court observed that an  organization's form
under state law does not affect its federal standing
(see,  Sierra Association for  the  Environment  v.
Federal Energy Regulatory Commission, 744 F.2d
661 (9th Cir. 1984)).  Rather, the court followed
Hunt and decisions from other circuits  in
applying a functional approach that focused on
using  an  "indicia of  membership" test  to
determine whether FOE had members whose
interests  FOE could represent  in court.    In
applying  this test, the  court observed that the
              purported members of FOE elected its governing
              body,  financed  its  operations,  had  voluntarily
              associated  themselves  with   FOE,  and  had
              consistently asserted they were members of FOE.
              In addition,  the court observed that the suit was
              within FOE's central purpose, and, thus, within the
              "scope  of  reasons  that  individuals joined  the
              organization."  Based on these facts, the court
              concluded that FOE had associational standing to
              represent its members.   The court reversed the
              district court decision and remanded the case for
              reconsideration.

              The dissent argued that the majority unnecessarily
              extended the standards for associational standing
              to non-profit corporations by improperly expanding
              Hunt, a case that involved a State agency, to cover
              non-profit corporations,  and by selectively citing
              other authority. The dissent also asserted that FOE
              had clear procedures to establish its membership
              under the laws of the District of Columbia, and
              failed to do so. In reaching its decision, the dissent
              argued  that the  majority had effectively relieved
              FOE of some of its Article III standing burden.

                     b.  Tenth  Circuit  holds that plaintiff
                         lacks   standing  to   challenge
                         endangered  species  consultation
                         requirements  within    EPA's
                         authorization of Oklahoma's NPDES
                         program because such requirements
                         only apply to sensitive waters and
                         plaintiff  failed to allege members
                         discharge to or intend to discharge
                        to such waters:

              American Forest & Paper Ass'n v. U.S. EPA, 154
              F.3d 1155 (10th Cir. 1998).

              Plaintiff  American Forest &  Paper  Association
              challenged  EPA's  approval  of the  Oklahoma
              National Pollutant  discharge Elimination  System
              permit program,  particularly those portions of the
              program  that  address  endangered  species
              consultation procedures  between Oklahoma and
              the  U.S.  Fish and Wildlife Service  (FWS).   In
              applying for authorization to administer the NPDES
              program, Oklahoma agreed to a procedure that
                                             36

-------
 Issue 15
Water Enforcement Division
ApriM999
specified how ODEQ and FWS would work together
to ensure  NPDES permits for discharges to
sensitive waters complied with ESA requirements.
This  procedure was formally adopted in an MOU,
which was incorporated by reference in the  final
rule approving Oklahoma's NPDES program.

Plaintiffs argued that EPA acted beyond it authority
by requiring Oklahoma to comply with the ESA
through the consultation process that was made a
condition of the State's NPDES authorization. EPA
countered that plaintiffs lacked standing to bring the
challenge, that the challenge was not ripe, and that
the Agency had  acted within  the  scope of its
authority.

The court held that plaintiffs lacked standing to
challenge  approval  of  Oklahoma's  NPDES
program,   including  the   consultation
procedures,   because  plaintiffs  had   not
established that any of their members  held
NPDES permits  to  discharge  into sensitive
waters  or planned to apply for such permits.
The court observed that, as an association, plaintiff
would have standing to bring suit on behalf of its
members if it could show that any of its members
would have standing  to bring suit on there  own
behalf.  But the court found  that because plaintiff
failed to assert that any of its members held permits
to discharge to sensitive waters in  the State, or
planned to seek such permits, plaintiff had failed to
demonstrate sufficient "injury in fact" for purposes
of establishing Article III standing. The court stated
that plaintiff had failed to show that its members
were "among the injured." The court acknowledged
that after oral argument the Fifth Circuit held in
American Forest & Paper Ass'n v. U.S.  EPA,  137
F.3d 291 (5th Cir.  1998) that plaintiff had standing
to challenge EPA's authorization of Louisiana's
NPDES program  on similar grounds as alleged
here, but stated it was unclear from that opinion
whether the  consultation  process imposed in
Louisiana was limited to sensitive waters or applied
to all permit applications. Thus, the court found that
the Fifth Circuit  decision  was  not necessarily
inconsistent with this court's decision.
                     3.  Enforcement UnderComparable Law
                        as Bar to Citizen Suit

                        a. Eighth   Circuit   holds   that
                           administrative  enforcement
                           agreement   between   State
                           environmental   agency   and
                           polluter precludes pending citizen
                           suit seeking civil penalties where
                           such agreement is the result of a
                           diligently   prosecuted
                           enforcement process:

              Comfort Lake Assoc.  v. Dresel  Contracting, Inc.,
              1998 U.S. App. LEXIS 3733 (8th Cir. Mar. 5 1998).

              Plaintiffs Comfort Lake Association,  Inc., brought a
              citizen suit under the CWA seeking injunctive relief,
              civil penalties, and costs and attorney's fees against
              defendants  Dresel Contracting  Inc.,  and  Fain
              Companies for alleged violations of the storm water
              regulations imposed under the CWA.  Defendants
              were granted an NPDES permit in the Fall of 1994
              to  address  storm water  discharges  related  to
              construction of a Wal-Mart, and did not fully comply
              with  the  sedimentation   and  erosion  control
              requirements. After a warning letter the Minnesota
              Pollution  Control  Agency  (MPCA) followed  by
              several inspections and issuance of two notices of
              violation,  defendants  brought the site  into full
              compliance on May 19, 1995. The NPDES permit
              was terminated in  April, 1996.  However, in May,
              1996,  MPCA  issued  a  negotiated  stipulation
              agreement that imposed $12,203 in civil penalties
              for all alleged permit  violations known as of the
              effective date of the agreement.

              Following the first warning letter from MPCA,
              plaintiffs had submitted a notice of  intent to file a
              citizen suit under CWA § 1365.  The district court
              had  granted  defendant's  motion  for  summary
              judgment and in a  separate order denied plaintiffs
              an award of costs and attorneys fees. Thus, the
              issues presented in this case were whether M PCA's
              enforcement action precluded plaintiff's claims for
              injunctive relief and civil penalties, and whether the
              district  court abused its discretion  in denying an
              award to plaintiffs of costs and fees.
                                             37

-------
 Issue 15
Water Enforcement Division
ApriM999
With regard to the preclusion issue, the court first
examined injunctive relief and then civil penalties.
The court observed that MPCA's determination that
there was no further likelihood that violations would
recur because construction was complete and the
permit terminated was entitled to deference.  The
court agreed with the Second Circuit that the claim
for injunctive relief was moot unless plaintiffs could
prove there  was a  realistic prospect that the
violation alleged would continue notwithstanding the
permit  termination  and  stipulation  agreement."
(See, Atlantic States Legal Found, Inc. v. Eastman
Kodak Co.. 933 F.2d 124,127 (2d Cir. 1991).  The
court concluded that plaintiffs had  not provided
evidence to contradict the stipulation  agreement.

As for civil penalties, the court held  that MPCA's
enforcement action did preclude plaintiff's effort to
obtain more severe penalties. The court stated that
although the stipulation agreement was not a res
judicata or collateral estoppel bar like a judicially
approved consent agreement, it did constitute a
final agency enforcement action that resulted from
diligent prosecution.  The court found such a result
consistent with the supplementary role of  citizen
suits as enforcement actions, and indicated that a
contrary  result would  discourage such  informal
agreements as reached here.   Finally, the court
concluded that since plaintiffs citizen suit had not
been a catalyst to the State's enforcement action,
no costs and attorneys fees were due plaintiffs.

       4.  Injunctive Relief

           a.  District  court  finds   inadequate
              basis  to   issue   permanent
              injunction where there is no proof
              of irreparable harm occurring due
              to  violations  of  flow  volume
              permit limits:

Coalition for a Livable West Side v. NYC PEP, 1998
U.S. Dist. LEXIS 1955 (S.D. NY., Feb. 20, 1998).

Plaintiffs brought a citizens suit under the CWA that
alleged the New York Department of Environmental
Protection (DEP) had violated the CWA permits for
the North River Wastewater Treatment Plant and
              the Wards Island Wastewater Treatment Plant by
              exceeding the limits on the volume of flow directed
              to these plants.  Plaintiffs requested that the court
              enjoin  DEP  from  making additional hook-ups to
              sewage service for Wards Island and  North River
              until the plants have adequate capacity to manage
              the increased flow, and requested the appointment
              of an expert  to monitor operations at these plants.
              DEP moved  for summary judgment, asserting that
              the flow limits were  not  subject to enforcement
              under § 505 of the CWA.  Previously, the New York
              State Department of  Environmental Conservation
              (DEC)  had  brought  administrative enforcement
              actions  against DEP regarding both  plants that
              resulted in consent agreements.  In prior decisions,
              the district court held that the these consent orders
              did not bar or render moot the citizens suit and had
              granted plaintiff summary judgment as to liability.

              The  two  central  issues presented  here were
              whether the flow limits exceeded the requirements
              of the CWA and therefore were not enforceable
              pursuant to  the Act's citizen suit provisions; and
              whether an injunction was justified. On the first
              issue, the court found that the flow limitations
              in the  State permits  were consistent with
              federal requirements and, thus, were amenable
              to enforcement through citizen suit. The court
              found that DEP's reliance on Atlantic States Legal
              Foundation,  Inc., v. Eastman Kodak Co., 12 F.3d
              353 (2d Cir.  1994), was misplaced, as the permits
              issued  in this instance did  not encompass  "a
              greater scope of coverage than that  required  by
              federal law."

              With regard to plaintiffs request for permanent
              injunctive relief, the court found that plaintiffs
              had  not demonstrated irreparable  injury and
              inadequate  legal remedies.  The court observed
              that plaintiffs had not demonstrated that the permit
              violations threatened  the integrity of the receiving
              waters for these plants. In addition, the court noted
              that  the  defendant  had  submitted  affidavits
              demonstrating that  both  plants had  been  in
              compliance with their flow permit limits since 1994.
              The  court further  found  no  basis  to appoint a
              special  master and,  thus,  denied defendant's
              motion and dismissed plaintiffs' claims.
                                              38

-------
 Issue 15
          Water Enforcement Division
                                   ApriM999
    H. Administrative Practice

       1. ALJ   holds   that   prehearing
          settlement  of administrative action
          must be reduced to writing and that
          only the Regional Administrator, not
          an EPA attorney, can bind Agency in
          settlement:

In the Matter of:  Indoor Air Quality,  1997, No.
Docket CAA- III-074.

Respondent  Solomon Schechter Day  School  of
Philadelphia,  Inc., moved for an order to enforce
what it claimed was an oral settlement agreement
between  itself and U.S. EPA.   EPA opposed the
motion to enforce settlement and requested that the
motion and  accompanying  exhibits  be stricken.
EPA denied  that its  counsel had orally agreed  to
settle and maintained that, irregardless, such an
agreement would have been  unenforceable as
matter of law.

The  court stated that prehearing settlements  of
administrative actions are government by Rule 18
of the Consolidated Rules of Practice. (40 C.F.R.
22.18). The  court found that under Rule 18 any
settlement must be reduced to writing and that
only the Regional Administrator can formally
settle a case on half of EPA.  Under Rule 18, an
EPA attorney does not  have the authority to bind
the Agency  by way of settlement.   The court
granted EPA's motion  to strike with respect  to
documents that related to settlement negotiations,
citing 40  C.F.R. 22.22, which provides for the
exclusion of evidence "relating to settlement which
would be excluded in federal courts under Rule 408
of the Federal Rule of  Evidence."   The court
allowed in two documents that did not specifically
identify the settlement positions of the parties.
    I.  Enforcement
       Penalties
Actions/Liabilities/
       1.  Third Circuit affirms district court's
           use of wrongful profits approach to
           calculating economic benefit factor
           of CWA penalty, and finds no error
           in  considering parent  companies
           finances  to determine  impact  of
           penalty on violator:

U.S. v. Municipal Authority of Union Township, 1998
U.S. App. LEXIS 16440 (3rd Cir. July 20, 1998).

Appellant Dean Dairy, a subsidiary of  Dean Food
I nc., appealed the amount of civil penalties imposed
for 1,754 violations of its IU permit and 79 instances
of interference with  Union Township's  POTW,
which occurred between July 1989 and April 1994.
The district court had imposed a civil penalty of $
$4,031,000 for these violations. The district court
used  a  bottom-up approach  to  calculating  the
penalty (i.e., calculating the economic  benefit and
adjusting that figure based on the remaining five
factors in 33 U.S.C. §  1319).   The district court
found that had appellant's Fairmont plant reduced
production  sufficient  to comply with its  permit
conditions, it was likely appellant would have lost a
major customer (PennMaid), and such loss would
have reduced appellant's revenues by $ 417,000
per year. This amount was then multiplied by the
time period of the violation, and then  doubled to
provide a proper deterrent and punishment.

In this action, appellant Dean Dairy challenged the
district court's analysis of  two of the six  factors
considered in  determining  the civil penalty:  the
economic benefit of the violations to Dean Dairy,
and the  economic impact of the penalty upon the
Dean Dairy.

Appellant first challenged the district court's the use
of a "wrongful profits" approach to  calculating the
economic benefit that resulted  from the violations.
Under the wrongful profits approach,  the  district
court  examined  documented  revenues  that
appellant was able to retain through conduct that
violated  the CWA, but which would  have been lost
to appellant had appellant  reduced its production
volume to achieve compliance with the conditions in
its IU permit. Appellants argued that the  parties
had stipulated that appellants had received no
economic   benefit  from  delaying  the   capital
investment necessary to achieve compliance, that
no published case had used the "wrongful  profits"
approach, that such an approach was inconsistent
                                             39

-------
 Issue 15
Water Enforcement Division
ApriM999
with EPA policy, and that the government unfairly
surprised appellant  by the use of this approach.
The court rejected each of these arguments.

After describing  the reasons  for  considering
economic benefit in determining civil penalties and
noting  that the maximum statutory penalty  that
could have been imposed was $ 45,825,000 (based
on  a  top-down  approach),  the  Third  Circuit
emphasized that the CWA does not prescribe the
precise methodology that  must  be  used in
calculating civil penalties and, thus, the district court
had considerable  discretion  in  determining its
approach.  The court observed that the facts of this
case were unique because the appellant lost money
due to its noncompliance (the fees it paid  to the
POTW exceeded the cost of building and operating
its   own  pretreatment   system).     In  such
circumstances, the court found that use of the
"wrongful  profits"  approach  was neither in
conflict with the  CWA nor  with economic
principles,   and   that  such  an  approach
represented  a method  other than calculating
delayed  or  avoided capital expenditures to
remove the economic incentive for violating the
CWA where  a violator was neither willing to
install the   requisite  treatment   nor  reduce
production  and  forego some portion of its
revenue. With regard to the remaining arguments,
the court  found that EPA guidelines were not
applicable to calculating civil penalties at hearing or
trial, and that such guidelines did indeed recognize
use of the  wrongful profits approach in specific
situations.    The  court also  found  that  the
government had  provided sufficient notice  with
regard to the wrongful profits approach throughout
the trial and had reserved its right to demonstrate
appellants economic benefit from actions other than
having delayed the capital expenditures needed to
come into compliance.

Regarding  consideration  of  the   finances of
appellant's  parent company,  Dean Foods, Dean
Dairy argued  that Dean Foods was not a party to
this action and had exercised insufficient control to
justify  piercing the  corporate veil.   The court
rejected this argument and stated that only Dean
Dairy was  penalized in  this  action.  The court
              explained that Dean  Foods was only considered
              with respect to ensuring that appellant Dean Dairy
              had the ability pay the penalty imposed. The court
              found that  such consideration was appropriate,
              particularly  where, as here, Dean  Dairy did not
              retain its revenues but transferred them to Dean
              Foods. The court affirmed the order of the district
              court.

                     2.  Seventh  Circuit  holds  stipulated
                         daily penalty in consent decree was
                         p ro pe rl y e nf o reed:

              U.S. v. Krillich. 126 F.3d 1035 (7th Cir. 1997).

              Defendant Krillich appealed a $1.3 million judgment
              imposed  against him  for failing  to fulfill  the
              conditions of a consent decree, which required the
              defendant to create a 3.1 acre wetland mitigation
              site at a development site. The consent  decree
              contained a schedule with interim dates and a date
              for completing the planting of the mitigation area of
              May 15, 1993.  The decree also included a force
              majeure provision and specified that any changes
              were to be in writing.

              Krillich claimed that too much rain in  June, 1993
              prevented him from  being able to  complete the
              required grading and  excavation, and that too little
              runoff from  the development resulted in the failure
              of the mitigation site to take on the characteristics
              of a  wetland.    Krillich  attempted  on  several
              occasions to obtain extensions of the deadlines in
              the consent decree, but when EPA  rejected such
              requests, never petitioned the court as the terms of
              the consent decree allowed. The issue on appeal
              was whether the district court properly  ordered
              Krillich to pay the $2,500 daily stipulated penalty.

              Krillich argued that  the  government,  through  its
              conduct,  modified   the   consent  decree;  for
              enforcement  purposes,   consent   decrees  are
              interpreted as contracts and that under Illinois law
              he was protected by the doctrine of impossibility
              and frustration;  and  the  government should be
              equitably estopped  from  enforcing the penalty
              provisions.    The  court  rejected  all of  these
              arguments.     The  court  observed   that
              correspondence between Krillich, EPA, and  DOJ
                                              40

-------
 Issue 15
Water Enforcement Division
ApriM999
clearly established that the government expected
Krillich to comply with the terms of the agreement.
The court observed that with regard to a new plan
offered  by Krillich,  such correspondence even
discussed potential alternatives to the daily penalty
provisions. The court specifically noted that despite
the clear and consistent nature of the government's
position,  Krillich  had not petitioned the court for
resolution of the conflict. With regard to the theory
of impossibility and frustration, the court observed
that these contract law provisions were akin to the
force  majeure provisions  in the consent  decree.
The  court declined  to allow Krillich to  rely on
impossibility and frustration when Krillich  had not
been able to establish that he deserved relief under
the force majeure conditions of the decree. Finally,
the court found that, given the difficulty of proving
estoppel against the government, the fact that EPA
worked extensively with Krillich in an attempt to
complete the job, and the fact that the government
was very clear that  the deadlines  in the  consent
agreement were unchanged, "estoppel is out of the
question."

The court held that the stipulated daily  penalty
was   properly   enforced   but,  upon  the
governments request, recalculated the  penalty
to cover one month less noncompliance (for a
final penalty  of $1,257,500).

       3. Tenth Circuit holds that injunctive
          relief is not a penalty for purposes of
          28 U.S.C.  § 2462  and  that  the
          concurrent remedy rule does not bar
          the government's claim forequitable
          relief:

U.S. v. Telluride  Co.. No. 97-1236 (10th Cir. June
25, 1998).

The  United States  appealed the  district  court's
grant  of partial summary judgement to appellees
Telluride Co., Mountain Village Inc., and Telluride
Ski  Area,  Inc., (Telco)  that  dismissed   the
government's claims for violations of the CWA that
occurred prior to October 15,  1988 based on the
five-year statute of limitations (28 U.S.C. § 2462).
The  government had  claimed that Telco  had
              illegally filled 45 acres of wetlands between 1981
              and 1989. Based on these alleged violations, the
              government had sought both civil penalties and
              injunctive relief.   The injunctive relief sought to
              enjoin the further discharge of material, restore
              damaged wetlands, and require the replacement of
              wetlands where damaged wetlands could not be
              restored. The district court applied the concurrent
              remedy rule (i.e., when legal and equitable relief are
              available concurrently, and the applicable statute of
              limitations bars application of the legal remedy, a
              court must withhold the equitable remedy as well) to
              hold that § 2462 barred the government's claim for
              injunctive relief.  The issues on appeal were: 1)
              whether § 2462 should have been held to  bar
              equitable relief where, by its terms, it applies to "any
              civil fine, penalty or forfeiture," and 2) whether the
              district court erred in having applied the concurrent
              remedy  rule to bar the government's equitable
              claims.

              With regard to whether the relevant statute of
              limitations applied to equitable relief, the court
              first stated that it was appropriate to interpret §
              2462 narrowly against the government because
              in the  absence  of  a   clear  congressional
              expression to limit the time within which the
              government  may  act  in  its  governmental
              capacity, no time limitation applies.  (See.  E.I.
              DuPont de Nemours & Co. v. Davis. 264  U.S.
              456, 462 (1924)). Moreover, the court noted that
              ' "statutes of limitation sought to be applied to
              bar the  rights of the government, must receive
              a  strict  construction   in  favor  of  the
              government."'  Id.  The  court then  considered
              arguments regarding whether the language  of §
              2462  (... "an  action, suit or proceeding for  the
              enforcement of any civil fine, penalty, or forfeiture,
              pecuniary or otherwise, shall not be entertained
              unless commenced within five years from the date
              when  the claims  first accrued...")  made  that
              provision applicable to non-monetary penalties,
              such as injunctions. The court concluded that it did,
              reasoning that the term "otherwise" modified the
              term "penalty."  However, the court then found
              that  an  injunction  as sought here did  not
              constitute a  penalty  because the injunction
              sought  only to restore the wetlands that had
                                              41

-------
 Issue 15
Water Enforcement Division
ApriM999
been damaged to the status quo or to create
new  wetlands  where  restoration  was  not
possible.  The court characterized such a remedy
as restorative in nature.

On the second issue, the court found that the
district  court  had  erred  in  applying  the
concurrent remedy rule to bar the government's
equitable  claims.   The  court observed that  in
making its decision the district court had relied on
U.S. v. Windward Properties, Inc., 821 F.Supp. 690
(N.D. Ga. 1993), which had applied the concurrent
remedy  rule to  bar the government's claims for
legal and  equitable relief, but that the  Eleventh
Circuit had abrogated the Windward decision  in
U.S. v. Banks. 115F.3d916, 919(11th Cir.  1997).
The court  observed  that  the  Banks  decision
rejected application of the concurrent remedy rule
to the government "when it seeks equitable relief in
its  enforcement  capacity under the  traditional
principles of construction  discussed above."  The
court stated, "for the same reasons applied  in
Banks, we conclude  the concurrent remedy rule
does not bar the government's claim for equitable
relief."

       4.  District  court  holds  that,  in  the
          absence  of  permit   language
          subjecting the permittee to statutory
          changes,   the  permit's  penalty
          language must control  in assessing
          civil penalties:

U.S.v. ConAgra. Inc.. 1997 U.S. Dist. LEXIS 21401
(D. Id. Dec. 31,1997). See case summary on page
3.

       5.  District   court  uses   "bottom-up"
          method to calculate civil penalty of
          $12,600,000 for violations of CWA:

U.S. v. Smithfield Foods,  Inc., 972  F. Supp. 338
(E.D. Va. 1997).

On  May 30,  1997,  the  court granted  partial
summary judgment on counts I through V to the
United States for defendant Smithfield's violations
of the CWA.  On July 18,  1997, the  court granted
              partial summary judgment on counts VI and VII to
              the United States.  The court previously found that
              defendant was liable for 164 days of violation for
              count V,  late  reporting. In this matter, the court
              sought to determine 1) the days of  violation for
              counts l-IVand VII; 2) defendant's maximum liability
              for the violations;  and 3)  the appropriate  civil
              penalty.

              In  calculating the days of violation, the court
              first observed that it would count each violation
              of a monthly average or loading limit as a
              violation of every day of the month in which the
              violation occurred.   In  addition,  the court
              observed that where multiple violations of the
              permit occurred  on the  same day, the court
              would deem  each  violation  to  constitute
              separate day of violation.  The court noted that §
              309(d) of the CWA provides for a "civil penalty not
              to  exceed 25,000 per day for each violation"
              (emphasis added),  which the court observed was
              not the same as a maximum penalty of $25,000 per
              day.    Based  on  the testimony  of an  EPA
              Environmental Scientist and the defendant's DMRs,
              the court found the following days of violation of
              defendant's   permit   limits:  5112  days   for
              phosphorus;  459 for  ammonia; 200 for  kjeldahl
              nitrogen (TKN); 72 for fecal coliform; 63 for total
              suspended solids; 4 for pH; 4 for cyanide; 4 for
              chlorine; and 1 for oil and grease. The court found
              a total of 5919 days of violation of effluent limits in
              the permit.

              With respect to count VII, recordkeeping violations,
              the court observed that defendants' records up to
              December 1993 were destroyed by an employee,
              and thus,  defendant did not have adequate records
              until December 31, 1996.  The court found that the
              defendant  was  in   violation  of  the  CWA
              recordkeeping requirements for 884 days.  The
              defendant argued  that the  destruction  of  the
              records should only have constituted a single day of
              violation,  but,  given the strict liability nature of the
              CWA, and  the need to create an  incentive to
              comply with the recordkeeping requirements rather
              than to destroy relevant records, the court declined
              to treat 884 days of missing records as a single day
              of violation. Overall, the court found that there were
              a total of 6,982 days of violation (this total included
                                             42

-------
 Issue 15
Water Enforcement Division
ApriM999
violations discussed above and 15 days stipulated
to by the defendant for violation  of submission of
false discharge monitoring  reports), and a total
maximum statutory penalty of $174,550,000.

The court then considered the §309(d) factors to
establish the appropriate civil penalty. Key factors
in the  courts  reasoning  were the  fact  that
defendants' effluent limit violations (5919 days of
violation) were frequent  and severe and had a
significant impact  on  the environment and  the
public;  its late reporting  violations (15 days of
violation) were moderately serious and could have
been prevented but were not made in bad faith;
defendants' submission of inaccurate DMRs  (15
days of violation) was extremely serious and could
have  been   prevented   through   the   use   of
safeguards;  and  defendant's destruction of and
failure to maintain records (884 days of violation)
were extremely serious and  also  could have been
prevented  through the use  of safeguards.   The
court did note that defendants made some efforts to
eliminate their discharges by connecting to the local
treatment works, believed their  discharges were
permissible pursuant to  a State order,  provided
altered records to Virginia DEQ, and directed its
employees to comply with CWA requirements.

The  court  used  a   "bottom-up"  method  of
calculating the economic penalty,  starting with
the  defendants'   economic benefit  of  non-
compliance ($4.2 million), and adjusting upward
from  there  based on  the §  309(d) factors.
Accordingly, the court  found  the appropriate
civil  penalty to was $12,600,000.

       6.  District court   holds  that  civil
          penalties recovered as a result of
          enforcement actions brought by  the
          government under the CWA must be
          paid into the U.S. Treasury:

U.S.  v.  Smithfield  Foods, Inc.,  1997 U.S. Dist.
LEXIS 18934 (E.D. Va. Nov.  26, 1997).

On August 8, 1997,  the District  Court for  the
Eastern District of Virginia  entered a judgment
against  the  defendants  for $12,600,000 in  civil
penalties. The court order the plaintiff to submit a
              proposal  for the allocation of all or part  of the
              penalty to the restoration of the Chesapeake Bay
              and its tributaries, specifically the James and Pagan
              Rivers. The government's response indicated that
              according the CWA, caselaw, congressional intent,
              and public policy, Smithfield  had to  pay the full
              $12,600,000 into the U.S. Treasury.

              The court observed that the CWA does not
              specify where civil penalties are to be paid, but
              noted that the Miscellaneous Receipt Act (31
              U.S.C.  § 3302(c)(1)) required "that 'a person
              having custody of possession of public money'
              must  deposit the  money with  the  Treasury
              within  a certain time limit." The  court then
              stated  that  is  was  its belief that a  penalty,
              imposed pursuant  to  a  federal statute, in an
              action  brought by  the federal  government,
              constituted public money, and, as such, it had
              to be deposited in the U.S. Treasury.

              The court observed that with respect to citizen suits,
              it was clear that Congress intended  penalties to be
              paid into the Treasury. See S Rep.  92-414, at 133
              (1972), reprinted in 1972 U.S.C.C.A.N. 3668,3745.
              The court found only one case that examined the
              issue  in  the context  of suits  brought  by the
              government.   This case held that "once  an
              assessment  was labeled  as  a civil  penalty, the
              money must be paid to the treasury."  U.S.  v. Roll
              Coater. Inc.. 1991 U.S. Dist. LEXIS 8790 (S.D. Ind.
              1991).  The court also observed that recent bills to
              amend the CWA would have provided authority to
              direct penalties towards "beneficial uses,"  but no
              such bills had yet become law.

              Although the court observed that depositing the
              penalties into the treasury did not, from a policy
              perspective, seem to be the most effective means
              of redressing environmental problems, the court
              ordered that the full penalty be paid into the U.S.
              Treasury.

                     7. District court imposes a civil penalty
                        of   $1,500,000  for  discharging
                        pollutants without a NPDES permit
                        over a 12-year  period  where the
                        violation  was  both  serious  and
                                             43

-------
 Issue 15
Water Enforcement Division
ApriM999
             prolonged but  the defendants'
             ability  to pay  justified  some
             mitigation of the penalty:

U.S. v. Gulf Park Water Co.. 1998 U.S. Dist. LEXIS
12802 (S.D. Miss., Mar. 11, 1998).

In a prior decision, defendants Gulf Park Water Co.,
Johnson Properties, Inc., Glenn K. Johnson and
Michael  Johnson, were found liable for discharging
pollutants from their wastewater treatment facility
into waters of the U.S. without a NPDES permit. In
this action, the court determined the amount of civil
penalties.

The  court  observed  that  defendants  were  in
violation of the CWA permitting requirements for 12
years (since 1985), having failed to connect their
wastewater treatment facility in Ocean Springs,
Mississippi, to  the  central  POTW.  The court
observed that in  1985  the  Chancery  Court of
Jackson County, Mississippi ordered defendants to
cease these discharges and find a lawful alternative
method  of managing their wastewater. The district
court found that, based on the five-year statute of
limitations,  defendants had  committed at  least
1,825 violations of the CWA.  The court noted the
maximum penalty per violation  was $ 25,000 per
day for violations that occurred through January 30,
1997, and $ 27,500 per violations for violations that
occurred after January 30, 1997.

Noting  the  split  of  authority  regarding   the
methodology for calculating civil penalties, the court
followed U.S. v. Marine Shale Processors, 81  F.3d
11329 (5th Cir. 1996) and chose to employ a top-
down method for calculating the penalty. The court
then reviewed the six statutory factors pertinent to
calculating  civil penalties under the CWA.  With
regard to the seriousness of the violation, the
court found  that the violations were serious
solely by virtue of their 12  year duration.  The
court stated that defendants knew that a perm it was
required and simply ignored that requirement.  The
court rejected the argument that the violations
were any less serious because their were other
sources of pollution on the  Gulf Coast,  and
stated that the U.S. "is not required to establish
              that environmental harm  resulted  from  the
              defendants' discharges, in order for this Court
              to find  the discharges  'serious'."   The court
              found that the defendants' discharges constituted
              both an actual and potential threat to public health
              and  the  environment.    The court declined to
              mitigate the civil penalty based on a lack of actual
              harm.

              With  regard to  economic  benefit,   the court
              considered the testimony of plaintiff's expert,  that
              the defendants enjoyed approximately $1.2 million
              benefit based on delayed and avoided  costs,  and
              the  court  adjusted this  estimate  for incorrect
              assumptions. The court concluded that $600,000
              was a reasonable estimate of economic benefit.
              The court then considered defendants' history of
              violations and observed that defendants remained
              in violation for a prolonged period, and continued to
              act in violation  even after the complaint in  this
              action had been filed.  In fact, the court observed
              that only an action seeking an order of contempt
              prompted defendants to start the process of coming
              into compliance.  With regard to good faith efforts
              to  comply  with  the CWA, the court  found  that
              although defendants were recalcitrant, there were
              some mitigating circumstances  that  warranted
              consideration and justified slight mitigation.   In
              assessing the economic impact of any  penalty on
              the defendants,  the court considered plaintiff's
              expert's estimate that defendants  could pay a
              penalty of $ 5,300,000 based on assets that could
              be sold, versus defendants' expert's testimony  that
              defendants could not pay any penalty based on
              defendant's tenuous financial condition. A special
              master was appointed and ultimately concluded  that
              defendants  could  pay a  penalty  in   excess of
              $1,000,000, which the court recognized was a
              significant reduction in the potential penalty.   The
              court concluded that defendants must  pay a  civil
              penalty of $ 1,500,000 for their CWA violations.

                     8.  EAB   upholds  ALJ    penalty
                         assessment  on grounds that failure
                         to challenge a State-issued permit in
                         a timely manner precludes raising
                         objections   years   later  in   an
                         enforcement proceeding:
                                              44

-------
 Issue 15
Water Enforcement Division
ApriM999
In re:  General Motors Corporation,  1997 CWA
LEXIS 13 (Dec. 24, 1997).

On June 16,  1988, the Michigan Department of
Natural Resources (MDNR) issued General Motors
(GM)  a  storm water discharge permit containing
numerical  discharge limits for copper, lead, and
zinc.  The permit provided for an  appeal to the
Michigan Water Resources Commission (MWRC)
within 60 days of permit issuance. GM never filed
an  administrative  challenge  to the permit.  The
permit also stated that a permit  renewal request
must be submitted by April 1, 1990.  GM did not
submit its renewal  application until May 18, 1990.

It was undisputed that discharges from  the GM
facility outfall exceeded the permit's limitations for
copper,  lead,  and zinc.  In May and December of
1991, prior to filing a complaint, EPA Region  V
issued two notices  of violation  and  orders for
compliance requiring certain actions  be taken.
After the Region filed its complaint in March 1993,
GM made three requests to MDNR to terminate the
permit. The first two requests were denied, and the
third request was granted on December 20, 1994,
after GM had completed  appropriate actions to
come into compliance.

GM raised three issues in this appeal:  1) whether
the permit was void ab initio because the State of
Michigan lacked the authority to issue the permit; 2)
whether, in this case, copper, lead, and zinc, could
be  considered "pollutants" under CWA;  and  3)
whether the permit expired by operation of law  in
1990 because GM did not file a timely request for
renewal.

The EAB held that because GM failed to exhaust
its administrative remedies understate law, GM
could not raise objections to the permit five
years later in an enforcement proceeding. The
EAB found that whatever the  merits of GM's
argument as to Michigan's alleged lack of authority
to issue the  permit in  light  of  the  1987 CWA
amendments,  those arguments could and should
have been raised before the state entity that issued
the permit, or to the MWRC in an administrative
appeal following permit issuance in 1988. Similarly,
having failed to timely challenge the inclusion of the
              permit limitations for copper,  lead and zinc, GM
              could not collaterally attack their inclusion in the
              enforcement proceeding. In addition, the permit did
              not expire by operation of law in 1990 because the
              permit renewal was requested prior to its expiration;
              both  GM and MDNR behaved as if the permit
              remained in effect; and GM failed to file  a timely
              objection to continuation of the permit.  Finally, GM
              did not  point  to any error, and  the  EAB found
              nothing erroneous, in the penalty calculation.

              Accordingly,  the EAB  agreed with the ALJ's
              decision to reject the merits of GM's arguments and
              affirmed the civil  penalty of  $62,500 assessed
              against GM.

                     9.  EAB holds that discharge of sludge
                        removed from  treated  wastewater
                        and  returned to  aeration basin to
                        continue cycle of treatment, violated
                        permit prohibition on discharge of
                        sludge  removed  from  wastewater
                        during the  course  of  wastewater
                        treatment:

              In re: Ketchikan Pulp Company, CWA Appeal No.
              96-7 (May 15,  1998). See case summary  on page
              15.

                     10.    ALJ imposes statutory maximum
                           penalty   of   $125,000  where
                           estimate of economic benefit was
                           adjusted to exclude period barred
                           by statute of limitations:

              In the Matter of:  B.J. Carney Industries, Inc., 1998
              CWA LEXIS 1 (Jan. 5, 1998).

              On June 9, 1997, the EAB issued a remand order
              to  determine:  1)  how  much of the $167,000
              economic  benefit  associated with the improper
              discharge of process wastewater accrued within the
              statute of limitations period;  and 2) an appropriate
              penalty based on the factors in CWA § 309. (See,
              In re: B.J.  Carney Industries, 1997 CWA  LEXIS 1
              (June 9, 1997)).  The remand instructed the ALJ to
              subtract from the $167,000 that portion of the
                                             45

-------
 Issue 15
Water Enforcement Division
ApriM999
benefit the  accrued outside of the statute  of
limitations.

Complainant's expert testified that the respondent's
economic  benefit  from  the  initial   date  of
noncompliance, January 26,1984, through the date
the penalty was deemed paid, July 1, 1997, was
$266,917. (Note:  the same expert had calculated
respondent's economic benefit of $167,000 at the
initial hearing). She calculated that the economic
benefit that  accrued from  the initial  date  of
noncompliance through the date when the  statute
of limitations did not bar enforcement, October 12,
1985, was $14,689.  Subtracting this amount from
either the $266,917 or  the  $167,000 amount
yielded  in  excess  of the  $125,000  statutory
maximum penalty.  Respondent argued that the
$14,689  amount was incomplete because there
was a "compounding" of that amount in  the years
after October 12,  1985 in complainant's analysis.
The ALJ  rejected this assertion, and found that
respondent had failed to demonstrate any flaw in
complainant's estimate. Respondent also  argued
that complainant's   analysis did  not  exclude
operating and maintenance costs after respondent
closed  the  facility  in 1990.   The ALJ  found,
however, the such  costs were in  fact excluded.
Finally, respondent argued that a different weighted
cost of capital should have been used after October
1993.  The ALJ found this argument immaterial,
since the statutory  maximum penalty had been
received  by October 1993.

Respondent submitted arguments  regarding the
gravity of the violations  and other factors that
mitigated the penalty assessment,  however, the
ALJ found that the EAB had sustained the findings
of the  initial hearing with regard to gravity and
mitigating factors.  Based on the EAB's instructions
not to retry matters already decided and reviewed,
the ALJ did not consider respondent's arguments
on these  points. The gravity portion of the  penalty
remained $9,000. Given respondent's reluctance to
come into compliance,  the ALJ   also  rejected
arguments that justice or equitable considerations
warranted a reduction in the penalty. Based on the
economic benefit and gravity of the violation, the
ALJ imposed the statutory  maximum penalty of
$125,000.
                     11.   ALJ  holds  that  respondent's
                           activities  following  purchase  of
                           oil   facility  constituted   a
                           substantial   continuation   of
                           activity that supported imposing
                           successor liability:

              In the Matter of: Heating Oil Partners, 1998 CWA
              LEXIS 8 (Sept. 21, 1998).

              U.S. EPA filed a  complaint and sought a partial
              accelerated decision that alleged that respondent
              committed a series of violations of the oil pollution
              prevention  regulations.     Violation  of   these
              regulations, found in 40  C.F.R. Part 112, subject
              the owner or operator  of  the facility to the
              assessment of civil penalties, pursuant to the CWA
              § 311 (b)(6)(ii). Respondent acquired an oil terminal
              (facility) that had been in violation of the CWA prior
              to  respondent's purchase and which continued in
              violation (i.e., remained essentially unchanged) for
              at least several months after the acquisition. EPA
              sought a  penalty of $125,000 and a  determination
              that respondent would be responsible for successor
              liability on the basis of substantial continuation of
              the oil business. The respondent denied liability for
              the violations.

              The ALJ  observed that although, generally, the
              purchaser of  an asset does not acquire the
              liabilities of the company that sold the assets,
              the purchaser may acquire seller's liability if: 1)
              the parties agree to that effect; 2)the transaction
              amounts to a de facto merger; 3) the transaction
              is fraudulently entered  into to escape liability;
              or 4) the  purchasing  company  is merely a
              continuation  of the business enterprise of the
              seller. The ALJ observed that federal courts have
              broadened the "mere continuation" exception, most
              notably,  under CERCLA, and often consider the
              following factors in determining whether a corporate
              successor should  be  held potentially liable  under
              the "substantial continuity" theory: 1)  retention of
              the same employees; 2) retention  of the  same
              supervisory personnel; 3) retention of the  same
              production  facilities  in  the  same  location;   4)
              retention  of the same  name; 5) production of the
              same product; 6) continuity of assets; 7) continuity
                                             46

-------
 Issue 15
Water Enforcement Division
ApriM999
of general business operations; and 8) whether the
successor holds itself out as the continuation of the
pervious  enterprise.   Federal courts have  also
found that EPA may extend liability to successor
corporations for the purpose of enforcing statutes to
assess civil penalties.

The ALJ  found that EPA had established several
elements of the  "substantial  continuity" theory.
Based on  this, the ALJ found  respondent's
activity constituted a continuation of the prior
company, which could be  held  liable for the
violations alleged in the complaintthat occurred
during the period the facility was owned by the
prior company.  Respondent's liability for alleged
violations and the amount of civil penalty remained
in dispute.   The  ALJ noted that  the finding of
substantial  continuity  was  irrelevant  from the
standpoint  of  deciding the amount of  the civil
penalty because both the penalty estimated for all
violations occurring prior to and after respondent's
ownership  (i.e.,  $234,572)  and  the   penalty
estimated for  only  the period  of respondent's
ownership (i.e., $205,772) exceeded the  statutory
maximum. EPA asserted that the resolution of the
issue of successor liability "is important because it
may  affect   the   knowledge  and  culpability
attributable to respondent." The ALJ observed that
this assertion alone would not have been proper
grounds  for  EPA's  motion,  but  the  fact  that
respondent's knowledge and  culpability remained
as  disputed   material  facts made  the  case
justiciable.

    J.  Criminal Cases

       1. Fourth Circuit holds that to establish
          a criminal violation of the CWA the
          government must prove defendant's
          knowledge of facts  meeting each
          essential element of the substantive
          offense:

U.S. v. Wilson. 1997 U.S. App. LEXIS 35971 (4th
Cir. Dec.  23, 1997).  See case summary on page
20.
                  K.  Section  311   (Oil   and   Hazardous
                     Substance Liability)

                     1.  ALJ  holds  prior  spill  obligates
                        facility to develop SPCC plan:

              In the Matter of: Philadelphia  Macaroni Co.,  1998
              CWA LEXIS 5 (May 28, 1998).

              EPA filed  a complaint that charged respondent
              Philadelphia Macaroni Company violated § 311(j)
              and 40 C.F.R.  Part 112 by failing to prepare an
              SPCC plan within six months of installing a 10,000
              gallon oil  tank at its Warminster, Pennsylvania
              facility.   The complaint, which was based on an
              EPA inspection conducted on January 29, 1997,
              sought a penalty of $33,420. Respondent asserted
              that it was not required to develop an SPCC plan
              because a discharge of oil from its facility could not
              reasonably have been expected to reach navigable
              waters. In addition,  respondent argued that EPA's
              proposed penalty was arbitrary and excessive. A
              prior state inspection had indicated that respondent
              had discharged oil  into a tributary of Pennypack
              Creek on January 11,1996.

              The ALJ found that pursuant to  40 C.F.R. §
              122.3(b),  the  prior  discharge  of  oil  into a
              navigable  water   of  the   U.S.   triggered
              respondent's obligation to  develop an SPCC
              plan by April 3,  1996. The ALJ  observed that
              EPA's inspection found that respondent had not
              developed an  SPCC plan in a timely manner
              and, therefore, respondent had violated § 311(j).
              In  addition,  the  ALJ  found  that respondent's
              assertion that a discharge  of oil from its facility
              could not reasonably have been expected to reach
              navigable waters was contrary to a preponderance
              of evidence in  the record.  Specifically, the  ALJ
              observed that although the enclosed tank was one-
              quarter mile from the  nearest tributary,  a sump
              pump was 10 feet from the tank and that pump
              emptied directly into the tributary. The ALJ added
              that the January 11 spill was  discharged into the
              tributary through the automatic sump pump  after
              the tank overflowed.
                                             47

-------
 Issue 15
Water Enforcement Division
ApriM999
In calculating the penalty, the ALJ  applied the
statutory factors specified in § 311 (b)(6)(B)(iii). The
ALJ agreed with EPA that failure to submit a SPCC
plan was a most serious violation, but reduced the
penalty amount by 10 percent because respondent
was a pasta maker not in the oil storage business,
secondary containment for the tank itself had been
provided, and respondent took measures to prevent
a recurrence of the January 11 spill. No adjustment
was made for any other factors.

II. Other Statutes

    A. SDWA

       1.  Fourth Circuit holds that EPA order,
          mandating systematic groundwater
          sampling  and  providing  bottled
          water to  those with  contaminated
          well water, constitutes a permissible
          exercise   of  EPA's  emergency
          statutory powers:

Trinity American Corp. v. U.S. EPA, 1989 U.S. App.
LEXIS 17751 (4th Cir. Aug. 4, 1998).

Petitioner Trinity American Corp., sought review of
an emergency order issued pursuant to the SDWA
that mandated systematic groundwater sampling
and the distribution of bottled water within a three-
quarter mile radius west-southwest of its property.
Trinity owned and operated a  polyurethane  foam
plant  in the Glenola Community of  Randolph
County, North Carolina. Prior to and during Trinity's
ownership, the land had been  contaminated with
various toxic chemicals due to the mismanagement
and improper disposal of such chemicals on the
property (and in part due to prior use of some of the
property as a landfill).

In 1989, the State health department fined the
company and forced it to remove 28,000 pounds of
diesel fuel-contaminated soil.  And in  1994, the
State  health department found  that  Trinity's
groundwater was contaminated  with dichloroethene
and trichloroethene  in excess of the maximum
allowed by EPA.  A site assessment revealed that
toxic  chemicals  contaminated  the   wells that
              supplied drinking water to Trinity and the 3-D
              Upholstery Shop. In 1996, the Randolph County
              Health Department,  issued Trinity a final notice to
              "cease  and desist" from  chronic  pumping and
              disposal of sewage  and  industrial  wastewater
              directly onto the ground.  Shortly thereafter, the
              State  health  department  also   found  several
              violations of North Carolina health codes due to
              Trinity's improper storage and disposal of sewage
              and industrial  waste.  In December 1996, Trinity
              entered into a consent decree with the state health
              department, attempting to  remedy the problems
              found in the site assessment.

              Subsequently, EPA  investigated the groundwater
              contamination in and  around  the Trinity site and
              confirmed  the  contamination found  in the site
              assessment and also found contaminated water in
              two other wells.  On the basis of its investigation,
              EPA issued an  emergency  order  in which  it
              concluded that chlorinated solvents and petroleum
              hydrocarbons  from the  Trinity  site  had  been
              detected above maximum allowable levels in private
              supply wells located to the west-southwest of the
              Trinity property.  Due to the high concentrations of
              these contaminants, EPA found that current use of
              the groundwater might present an  imminent and
              substantial endangerment to human health.  EPA
              also determined  that  the  State's  efforts were
              insufficient to protect the public health.

              Trinity argued that  1)  it was  protected under an
              "innocent  landowner"  defense;  2)  it did  not
              contribute  to  the  contamination;  3) the  EPA
              emergency order displaced the State's authority to
              protect   groundwater;   and  4)   no evidence
              demonstrated  that any  person  had  actually
              consumed   contaminated  water.    The  Eighth
              Circuit  rejected each  of these  arguments,
              finding that no  innocent landowner defense
              existed under the SDWA, the record supported
              EPA's conclusion that Trinity contributed to the
              groundwater  contamination, State  action was
              reasonably viewed as inadequate to  protect
              public health and thereby foreclose the need for
              EPA action, and that EPA need not prove that
              anyone  had  consumed  contaminated  water,
              only that contaminants in or likely to enter an
                                             48

-------
 Issue 15
Water Enforcement Division
ApriM999
underground source of drinking water may pose
an imminent substantial endangerment to the
health of persons.   Having found a rational
basis for EPA's decision, the court held that the
order  constituted a permissible exercise of
EPA's emergency powers under the SDWA and
denied Trinity's petition for review.

       2. EAB  rejects  challenges  to   UIC
          permits:

In re:  NE Hub Partners. 1998 UIC LEXIS 1 (May 1,
1998).

Petitioners filed  for review of  two underground
injection control (UIC) permits issued by Region III
to  NE Hub  Partners  that would  allow  the
construction and operation of up to ten Class III UIC
wells for solution mining and up to ten Class I wells
for  brine disposal.   Petitioners used  the  area
proposed for the wells—a sandstone formation—for
storage of natural gas. Petitioners presented both
substantive  and procedural  challenges.  The
substantive   challenges   concerned   technical
criticisms  of  permit  conditions  regarding  the
construction  and operation of the UIC wells.  The
procedural claims addressed  the adequacy of the
Region's response to comments, as well as other
claims, including, reopening the comment period.

Regarding the solution mining permits, petitioners
argued 1) the permit conditions that addressed
drilling mud loss during well construction would lead
to the migration of contaminants and natural gas to
underground drinking water  sources;  and 2) the
permit conditions that addressed the cementing of
well  casings were  inadequate to  prevent  the
migration of contaminants to underground drinking
water sources.  The EAB rejected both of these
arguments,  finding  first that the UIC permits
contained  adequate  conditions  to  ensure
compliance with the requirements of 40 C.F.R.
§ 146.32 (prevent migration of fluids into or
between underground  sources  of  drinking
water), the Region had adequately considered
petitioner's  concerns, and that a difference of
expert  opinion,  without  more,   did   not
demonstrate the Region's  action was clearly
              erroneous or an important matter of policy or
              exercise of discretion. As to the cementing issue,
              the EAB also rejected petitioner's  claims,  finding
              that  the  permit conditions  specified  adequate
              means of verifying the integrity of the well casings
              and   ultimately  preventing  the   migration  of
              contaminants.

              With regard to the brine permits, petitioners argued:
              1) the maximum injection pressure  was calculated
              incorrectly and was too high; 2) the area of review
              (for corrective action and monitoring) was too small;
              3)  the corrective  action   requirements  were
              developed  improperly; and 4) the  monitoring
              requirements were based on incomplete information
              and were inadequate; and 5) additional analysis of
              the liquid to be  injected was required.  The  EAB
              rejected each of these arguments,  finding:  1) the
              Region  included an  MIP permit  condition  that
              satisfied the regulatory standard despite using in
              part guidance developed for Class  II wells; 2) the
              site-specific  area of  review was   calculated  in
              conformance with the requirements of § 146.6(a);
              3) the Region included sufficient corrective action
              conditions (e.g., plug and abandon 6 wells) and
              explained the basis for determining such conditions,
              which  adequately fulfilled the  corrective  action
              requirements;  4)  the   Region  developed  a
              monitoring  system   for  the brine wells  that
              considered and  was protective of  petitioners gas
              storage operation and conformed with relevant
              regulatory requirements; and 5) NE Hub adequately
              characterized both the water to be injected into the
              salt deposits and the salt that would  be dissolved to
              injected as brine.

              The petitioners also raised three procedural claims:
              1) that the Region did not adequately respond to
              comments submitted by  petitioners on the  draft
              permits; 2) the Region should have reopened the
              comment period due  to changes in the permitted
              activity and the receipt of  new information;  and 3)
              EPA lacked jurisdiction because NE Hub decided
              not to inject the brine produced from the first two
              solution mining  wells.  The  EAB  rejected these
              arguments, finding: 1) the Region considered and
              responded  to   all   significant  comment  in
              conformance  with  40 C.F.R. § 124.17;  2)  the
              changes in the permitting activity were not germane
                                              49

-------
 Issue 15
Water Enforcement Division
ApriM999
to issuance of the UIC permit and the two pieces of
"new" information received during remand  of the
permits did not raise a substantial new question or
issue; and 3) NE Hub reserved the right to use the
wells  for disposal  of brine  from the remaining
solution mining wells.  Moreover, the  EAB  stated
that  EPA's role was not to assess  what  might
constitute excess capacity but, rather to determine
whether the wells as proposed would comply with
the requirements of the SDWA.  The petition was
denied.

    B. RCRA

       1.  Ninth Circuit holds RCRA does not
           authorize  citizen  suits  based  on
           State Subtitle D standards that are
           more stringent than the minimum
           federal criteria:

Ashoff v. City of Ukiah.  130 F.3d 409 (9th Cir.
1997).

Plaintiff Ashoff  brought a RCRA citizen  suit that
asserted  the City of Ukiah's solid waste  disposal
site had violated RCRA, the CWA, and State law.
The district court dismissed the  RCRA claim  for
lack   of  subject matter  jurisdiction  and also
dismissed the CWA claim.  The  court concluded
that RCRA did not authorize citizen suits in federal
court to enforce state regulations authorized under
Subtitle D of RCRA, but indicated that Ashoff could
file a  complaint  alleging violations of the federal
minimum criteria.  Instead of doing  so, Ashoff
appealed.  The question on appeal was  whether
RCRA authorized citizen suits in  federal court for
violations of State standards that are more stringent
than the federal criteria.

Ashoff argued  1) RCRA  allows  States to  enact
more stringent standards and nothing in RCRA bars
suits on such standards, 2) limiting citizen suits in
such  cases would be contrary  to congressional
intent, 3) other environmental statutes  such  as the
CWA and CAA  authorize  citizen suits based  on
more  stringent state standards, and 4) limiting
claims to those based on minimum federal criteria
would allow landfill owners to defeat RCRA  citizen
suits  by  arguing in  every case that the  state
              standard is more stringent.  The court rejected
              these arguments and held that RCRA does not
              authorize RCRA citizen suits based on State
              Subtitle  D standards that are more stringent
              than the minimum federal criteria.

              The court first observed that RCRA does authorize
              citizen  suits on the basis of the minimum federal
              Subtitle D criteria (40 C. F. R. Part 258) in states with
              approved Subtitle D (municipal solid waste landfill)
              permit  programs. The court found that this was so
              because  the  state  standards  became effective
              pursuant to the RCRA provisions (i.e., the federal
              criteria gave the state standards legal effect under
              federal law).   Following from this, however, the
              court concluded that "RCRA does not authorize
              suits based on  State standards  that are more
              stringent than the federal criteria because they do
              not become effective pursuant to RCRA.  When a
              State elects to create more stringent standards,
              nothing in RCRA gives them legal effect. Their legal
              effect flows from State law."

              The  court noted  that  the  district court  had
              suggested that citizens suits could not be brought
              to enforce State Subtitle  D regulations once the
              State program was authorized by EPA. The court
              stated this was incorrect. The court observed that,
              for the reasons discussed above, citizen suits under
              RCRA  could be brought by any person, whether in
              an authorized or unauthorized state, to  enforce
              compliance with  the statutory  and  regulatory
              standards.    The court  stated  that  EPA  had
              endorsed numerous times the use of RCRA citizen
              suits to enforce the Subtitle D criteria  regardless of
              whether the Agency  had approved a State/tribal
              permit  program.

              The   court  observed   that   although   other
              environmental  statutes   establish  a   similar
              relationship between EPA and the States, and allow
              citizen  suits to be based on more stringent state
              standards, these statutes differ from RCRA and,
              therefore, cannot be  read to support  plaintiffs
              claims.  The court noted  that the  CWA explicitly
              requires States to create more stringent standards
              (26  U.S.C. §  1311(b)(1)(C)).   The court also
              observed that the citizen suit provision of the CWA
              specifically incorporates orders issued by a State.
                                              50

-------
 Issue 15
Water Enforcement Division
ApriM999
(26 U.S.C.  § 1365(a)(1)).  The court stated that
RCRA has  no analogous provisions.  Finally,  the
court observed that to adopt plaintiff's reading might
improperly  interfere with State sovereignty, and
may chill  States  from  adopting  more  stringent
standards.

       2.   District  court  denies  motion  to
           dismiss,   finding   that   where
           hazardous  waste remains on-site,
           the  failure  to  properly  close a
           hazardous   waste  facility  may
           constitute a continuing violation:

Cornerstone Realty, Inc. v. Dresser-Rand Company
and Ingersoll-RandCompany, 1997U.S. Dist. Lexis
21740 (D. Conn. September 30, 1997).

Plaintiffs brought a civil suit seeking injunctive relief
and damages against defendants, the current and
former owners of commercial property, based on a
failed real estate  transaction that resulted when
contamination was found on the property.  Plaintiffs
brought a variety of state law claims, as well as  two
RCRA claims, specifically failure to properly close
a hazardous waste generating facility and failure to
properly close a hazardous waste management
facility.   Defendants moved  to  dismiss  six of
plaintiff's  claims,  including  the  RCRA claims.
Defendants argued that both the RCRA claims were
time-barred by the five-year statute of limitations in
28 U.S.C. § 2462  because the failure to properly
close the facility occurred  more  than five  years
before these claims were filed. Plaintiffs contended
that the RCRA claims were continuing violations
that tolled the limitations period.

The court held that the obligation of an owner
or operator of  hazardous waste  facility to
properly close that facility continued for as long
as  the  facility  remained   unclosed   and
hazardous waste  remained at the site. The court
stated that the  closure regulations and relevant
caselaw supported the assertion that the obligation
to undergo  closure continued where,  as  here,
hazardous waste remained on the property.  The
court found that because the obligation to properly
close the facility continued beyond the date when
              defendants shut down the facility, plaintiff's failure
              to  meet  its closure obligations  prevented the
              violation from being complete, which prevented the
              statute of limitations from tolling.  Based on this
              continuing obligation and plaintiff's allegation that
              hazardous  waste  materials  remained  on the
              property,  the court found that the RCRA claims
              should not be dismissed because the plaintiff may
              have been able to prove a continuing violation.

                     3.   District  court grants in  part  and
                         denies in part motion for preliminary
                         injunction  with  respect  to  RCRA
                         claims,  and  denies  motion  with
                         respect to CWA claim due to split of
                         authority  regarding  whether the
                         continuing   migration   of
                         contaminated   groundwater
                         constitutes an ongoing violation:

              Wilson v.  Amoco Corporation, 1998  U.S.  Dist.
              LEXIS 57 (D. Wyo. Jan. 2, 1998).

              Plaintiffs,  citizens of Casper, Wyoming, brought a
              citizen suit  under RCRA and CWA alleging that
              defendants, Amoco   Corporation,   Burlington
              Northern    Railroad  Company,   and   Steiner
              Corporation, discharged and released hazardous
              and  toxic  contaminants  from their  respective
              Casper facilities thereby injuring the public health
              and the environment as well as plaintiffs' properties.
              Plaintiffs sought a preliminary injunction requiring
              defendants  to   contain  the  discharges  and
              remediate the contaminated  property.

              At Amoco's petroleum refinery and  tank farm
              located along the North  Platte River, the court
              found  that  environmental   concerns  included
              groundwater contamination, lead  contamination,
              sulfuric   acid   contamination,   asbestos
              contamination, benzene contamination, and various
              forms of contamination that potentially remained in
              the large volume of underground piping beneath the
              refinery.  The  court also found that  Amoco,  in
              working with EPA and  Wyoming  Department of
              Environmental  Quality  (WDEQ) to  address the
              environmental  concerns,  exhibited  a  pervasive
              corporate attitude to delay, deter, and deceive.
                                             51

-------
 Issue 15
Water Enforcement Division
ApriM999
At the Burlington Northern (BN)  rail yard facility,
testing confirmed diesel and oil contamination and
a substantial plume of PCE extending across the
property. At Steiner's former dry cleaning facility, a
significant PCE plume existed that originated in the
vicinity of the facility and extended underneath the
BN yard and eventually to the  North Platte River.
Both parties denied any responsibility for the PCE
contamination.

At  the  time of  filing,  there  were no  ongoing
operations at the Amoco and Steiner facilities, and
plaintiffs did not charge that BN's current operations
resulted in new discharges of contaminants into the
groundwater. As such, with a few exceptions as to
Amoco, the alleged ongoing violation with  respect
to all three defendants was the continuing migration
of the contaminated groundwaterto the North Platte
River.   "Given  the split  of authority  as to
whether such ongoing migration  constituted a
CWA violation," and the failure of the parties to
brief the court on this issue, the court declined
to  consider the  CWA  claim and  proceeded
solely under RCRA.

Because plaintiffs sought a mandatory injunction,
which was more  burdensome  than a prohibitory
injunction, plaintiffs were  required to demonstrate
entitlement  to  the  injunction  by  heavy  and
compelling evidence. With respect  to Amoco, the
court  applied  the  traditional  equitable factors in
determining if  an injunction was appropriate, and
found that the  balance of equitable factors tipped
heavily in  favor of the issuance  of an injunction.
However,  given that a trial on  the merits was six
months away,  the court determined that  it was
unreasonable to issue a plenary order requiring the
requested  remediation,   since it could  not  be
accomplished  within that time.  The  court  did
consider it practicable to order Amoco to undertake
a number of other investigative,  monitoring,  and
interim measures.

As for the contamination the court found attributable
to BN, i.e., the diesel fuel, the evidence  did not
clearly indicate an  existing threat  to human health
or the environment. The court found that any threat
posed by  the mere presence of  a  nonhazardous
substance  such  as  diesel was not sufficiently
              severe to warrant comprehensive injunctive relief
              only six months before trial.

              With  regard  to Steiner, the  court  found  that
              plaintiffs' evidence did not clearly show that Steiner
              was a significant contributor to the PCE plume or
              that the plume constituted  an  imminent  and
              substantial   endangerment  to  health  or  the
              environment. The court was reluctant to impose the
              considerable   burden  of  investigating   and
              remediating a  plume for  which Steiner almost
              certainly did not bear sole responsibility.

              Accordingly, the court granted in part and denied in
              part plaintiffs' motion for preliminary injunction with
              respect to their RCRA claim against Amoco, and
              ordered specific injunctive relief. Plaintiffs' motion
              was denied with respect to their CWA claim against
              all defendants, and denied in all respect as to BN
              and Steiner.

                     4.  District court holds that the leaching
                         of    hazardous   waste   into
                         groundwater from hazardous waste
                         contaminated  soil constitutes the
                         continuing disposal  of  hazardous
                         waste:

              U.S. v. Power Engineering Co.,  1998 U.S. Dist.
              LEXIS 8650 (June 10, 1998).

              The United States, on behalf of U.S. EPA, brought
              an  overfile  enforcement action against defendant
              Power Engineering and Jack Lilienthal, a third party
              defendant,  for violations of RCRA stemming from
              the operation of a metal refinishing facility and the
              failure  to  properly  manage  and  dispose of
              hazardous  waste generated by the facility.   The
              action sought a preliminary injunction that required
              defendants to document that they had  secured the
              resources to properly close  the facility and to pay
              third-party  claims that may have arisen from its
              operation. Defendants, in relevant part, argued that
              the facility  operated in compliance  with Colorado
              hazardous  waste regulations  and therefore  was
              exempt from financial assurance requirements.

              The court concluded that the facility continued to
              dispose of  hazardous waste in three distinct ways
                                              52

-------
 Issue 15
Water Enforcement Division
ApriM999
and thus was not  in compliance with Colorado
hazardous waste regulations. First, the court found
that the hexavalent chromium condensate mist (i.e.,
suspended liquid) generated by air scrubbers and
that settled onto soil within the facility constituted a
hazardous waste.

Second, the court found that the facility's failure to
remediate soil contaminated  by  a  yellow/orange
liquid that leaked from air scrubbers down the west
side of the  facility's main building constituted
continuing disposal of hazardous waste because
such waste  continued  to  leach chromium  into
groundwater.  Defendant's  argued that the leaks
were repaired in 1994  and,  thus, disposal  had
ceased.  The court  disagreed, and based on
numerous  prior  decisions,   held   that  the
leaching of hazardous waste into groundwater
from  hazardous  waste  contaminated  soil
constituted   the   continuing  disposal   of
hazardous  waste.   The  court observed "the
overwhelming majority [of decisions] have found
continuing violations for substantive violations of
RCRA when the environmental harms caused by
the violations  are   curable,  even when  the
affirmative act that initiates the violation occurred on
a single day."  The court noted that because the
definition of the term "disposal" in RCRA includes
the term "leaking" disposal occurs  both when a solid
or hazardous waste  is first deposited onto the
ground as well as when  such wastes migrate from
their initial disposal location.

Finally, the  court found that the facility failed to
remediate three open waste piles of contaminated
soil excavated from beneath chrome-plating tanks.
The court ordered defendants to  provide financial
assurance valued at $3,500,000.

    C.  Paperwork Reduction Act

       1. District court holds  that Paperwork
          Reduction Act  does not require an
          agency to obtain OMB approval for
          the agency to use information that is
          properly collected in new ways:
              Tozzi v. U.S. Environmental  Protection Agency,
              1998 U.S. Dist.  LEXIS 6234  (D.C. Cir. Apr.  21,
              1998).

              Plaintiffs sought a preliminary injunction that would
              have restricted EPA from using TRI data  for the
              Sector Facility Indexing (SFI) Project, a project that
              seeks to integrate existing environmental records
              from several publicly available data bases.  The
              information  compiled  in these  data  bases was
              collected pursuant to OMB approvals obtained in
              conformance  with  the  requirements  of  the
              Paperwork Reduction  Act.  Plaintiffs argued that
              EPA could not use the TRI data for the SFI  project
              without first obtaining a separate OMB approval for
              this new use of the data.  Plaintiffs asserted that
              EPA's use of the data for the SFI project constituted
              a "substantive or material modification." Plaintiffs
              also  argued that  EPA  and  OMB should have
              reviewed the proposed new uses of the data based
              on  a public comment period, and that OMB should
              have made  a determination  of the new uses'
              practical utility pursuant to 44 U.S.C. § 3508.

              The court found that republishing the TRI data
              in  another form did not constitute  making a
              substantive or material modification to the data.
              The court observed that the information itself
              was not modified in any way,  nor was  the
              manner in which is was collected. In addition,
              the court found that OMB  does not have to
              separately approve each and every new use of
              information properly collected.  Rather,  the
              court observed that the proper focus for OMB
              approval under the PRA is on the collection of
              information, not the agency's subsequent use
              of the collected information.

                     2.  ALJ holds that PRA defense may be
                        raised after answer has been filed
                        and, regarding certain  RCRA  BIF
                        provisions, EPA failed to display an
                        approved  OMB control  number in
                        both the Federal Register and  the
                        C.F.R.:

              In  the Matter of:   Parke-Davis  Division Warner-
              Lambert Co.. 1998 RCRA LEXIS 2 (Jan. 2, 1998).
                                             53

-------
 Issue 15
Water Enforcement Division
ApriM999
EPA filed a complaint against respondent Parke-
Davis that alleged violations of EPA's Boiler and
Industrial Furnace (BIF) regulations promulgated
under  RCRA.    Respondent  moved  for  an
accelerated  decision dismissing count  I of the
complaint on the grounds that EPA failed to comply
with  requirements imposed under the Paperwork
Reduction Act (PRA). EPA argued that respondent
had waived its PRA defense because it had failed
to raise this  defense in its answer.  EPA also
argued that there was only  a partial  lapse in
obtaining OMB approval.

Count I involved five separate information request
regulations [40 C.F.R.  §§ 265.13 (general  waste
analysis), 265.15 (general inspection requirements),
265.16 (personnel training), 265.54 (amendment of
contingency plan), and 265.112  (closure  plan;
amendment of plan)].  The ALJ rejected EPA's
waiver argument, citing Lazarus.  Inc..  TSCA
Appeal No. 95-2 (September 30,  1997) for the
proposition that respondent could raise a PRA
defense after an answer had been filed.  The ALJ
observed that, as stated in Lazarus, use of a PRA
defense could only  be barred  where it  was "so
untimely  as  to  prejudice the  complainant,  or
'interfere  with the [judge's]  duty to  conduct  an
efficient adjudication'."  The ALJ stated that EPA
did not argue it was prejudiced and that given the
prehearing  status of the  case, EPA could not
substantiate such an argument.  Accordingly, the
ALJ barred EPA from prosecuting the respondent
for the first three alleged violations.

With regard to § 265.54, EPA asserted an  incorrect
but current  OMB control number was displayed in
the C.F.R.,  and notice  of  OMB  approval was
published in the  Federal Register.  Similarly, with
regard to § 265.112, EPA asserted  that a "blanket
display" indicating OMB approval appeared at the
end  of 40  C.F.R. § 265.120.   In  addition, EPA
argued that notice of the  OMB approval number
was  published in the Federal Register.  The ALJ
found that these efforts  failed to comply with
the plain wording of the PRA, which requires
that  EPA display the control number from the
approved ICR in both the Federal Register and
the C.F.R.
                  D.  Freedom of Information Act (FOIA)

                     1.  District court holds that materials
                        subject to FOIA request must be
                        released  where notes were  not
                        deliberative  and did  not  concern
                        enforcement matters and release of
                        criminal files would  not  interfere
                        with enforcement proceedings:

              Grine v. Coombs. 1997 U.S. Dist.  LEXIS 19578
              (W.D. Pa. Oct. 10, 1997).

              Plaintiffs Grine et al., brought nine claims against
              defendants Coombs etal., related to contamination
              of   plaintiff's  property  allegedly  caused   by
              defendants.   One claim was  a  Freedom  Of
              Information Act (FOIA) claim against the U.S. EPA,
              which asserted that EPA failed to release results of
              soil tests of plaintiff's  property and that  EPA
              improperly withheld non-exempt documents that
              related  to  an   alleged  chemical  spill  on  the
              defendant's property and that could have been the
              source  of the contamination. Plaintiffs sought six
              distinct  items of information and the court  had
              previously granted EPA summary judgment with
              regard to two of those items.  This court examined
              EPA's summary judgment motion for the remaining
              four items.

              The first of  the remaining four items was the log
              book of the EPA  On-Scene Coordinator (OSC).
              EPA had  provided to plaintiffs a copy of the log
              book with portions not relevant to the plaintiff's case
              redacted.  The  court reviewed the entire log in
              camera and, with the exception of two  limited
              entries, found that EPA had provided all portions of
              the log that were responsive  to plaintiffs  FOIA
              request.  The court denied EPA's motion with
              regard  to the two limited excerpts.

              The second item consisted of several EPA inter-
              office memoranda in the form  of  e-mail.   EPA
              asserted that this information was protected under
              EPA's deliberative process privilege, since it played
              a part in Region Ill's decision as to what, if any,
              Superfund removal action would be taken at the
              plaintiff's property. Plaintiffs argued that there was
                                             54

-------
 Issue 15
Water Enforcement Division
ApriM999
never any  truly  deliberative process regarding
Superfund   removal   because  the  level   of
contamination  was  not sufficient.  The  court,
following in  camera  review,  held that  the
withheld  material  was  covered  by   the
deliberative  process   privilege,   since   the
redacted material was  pre-decisional in nature
and contained deliberative information.

The third item  concerned certain notes of Daniel
Isales, Assistant Regional Counsel, made from a
September,  1995, phone  conversation with Dan
Holler of the  Pennsylvania DEP. EPA argued that
these notes where protected under either attorney
work product doctrine, or the deliberative process
privilege. The court held that the notes were not
protected under  either privilege.   The  courted
concluded that the  notes  essentially contained
factual information and that they were predecisional
in  nature, since they post-dated the decision to
forgo federal removal action. The court also held
that the  notes were not  protected under  the
attorney work-product privilege, since they did
not reflect  mental impression, opinions,  or
strategies concerning anticipated litigation. The
court observed that the notes did  not  suggest
consideration of any Superfund enforcement action,
and consideration of such action was  inconsistent
with  the  OSC's  representation  that EPA had
decided in March 1995, not to take further action at
the plaintiff's property.  The court denied EPA's
motion with regard to this item.

The last items considered were several documents
from EPA's Criminal Investigation Division. With
regard to fourteen entries in the OSC's logbook,
the court observed that even if  these were
compiled for law enforcement purposes, EPA
did not demonstrate how  disclosure of these
entries  would interfere  with  potential law
enforcement  proceedings.  Thus,  the court
ordered production of this information. With regard
to six Reports of Investigation (ROIs), the court
found that although they were compiled for law
enforcement  purposes  under  the "rational
nexus" test, following review, the information
was  not  deemed  so   sensitive that  "its
production  would reasonably be expected to
              cause   interference  with   any  pending
              enforcement proceedings."  The court ordered
              production of this information as well. Finally, with
              regard to two Memoranda of Interviews (MOIs),
              the court found that these documents also were
              not  of  such  a sensitive  nature  that their
              disclosure  would  likely  interfere with  any
              pending enforcement proceedings.  EPA  had
              also  asserted  that these  MOIs were exempt
              under § 552(b)(7)(C) of the APA, but the court
              found  no  compelling privacy  interest was
              served by restricting access to these MOIs.

                 E.  Oil Pollution Act (OPA)

                     1.  Ninth Circuit holds  State BAP oil
                        spill  regulations are not preempted
                        by   Federal  laws,  except  for
                        provisions  addressing  design  and
                        construction requirements,  which
                        are preempted:

              International Assoc. of Independent Tanker Owners
              v. Gary Locke. 1998 U.S. App. LEXIS 12894  (9th
              Cir. Feb. 4, 1998).

              Appellants sought review of the district courts grant
              of summary judgment finding that each of 16 of
              Washington State's Best Available Protection (BAP)
              regulations were not preempted by the Oil Pollution
              Act of 1990 (OPA) and other federal laws.  The
              State's BAP regulations impose requirements on oil
              tankers to prevent oil spills.

              The state defendants argued that OPA § 1018
              provides that nothing in the OPA preempted states
              from imposing "additional liability or requirements
              with respect to the discharge of oil or other pollution
              by oil."  Appellants countered that § 1018 applied
              only to  Title I  of the Act,  and did not affect
              preemption imposed by other provisions of the Act.
              The court found such a reading at odds with the
              plain  language  of  §  1018,  which states  that
              '"nothing  in  this  Act"  preempts  states  from
              "imposing any .... requirements with respect to the
              discharge of oil or other pollution by oil".' The court
              found that  the  savings provisions of § 1018
              applied to all the titles of the OPA. The court
                                             55

-------
 Issue 15
Water Enforcement Division
   ApriM999
declined,   however,  to  apply the  savings
provision of § 1018 to other federal  tanker
regulation statutes.

The court then  examined whether other  federal
statutes addressing tanker regulation preempted
the state  BAP  regulations.    The court first
addressed  conflict   preemption.    Appellants
maintained that the BAP regulations frustrated the
purposes and objectives  of Congress in adopting
the current legislative scheme applicable to  oil
spills.  The  court disagreed. The court looked at
the overall purposes and objectives of Congress in
passing the Tank Vessel Act (TVA), the Ports and
Waterways  Safety Act  (PWSA), the Port and
Tanker Safety Act (PTSA), and the OPA, and found
that the most recent statute—the OPA—reflected
Congressional "willingness to permit state efforts in
the areas of oil  spill prevention,  removal,  liability
and compensation. The court  declined to strike
down the  BAP regulations  on the basis  of
conflict preemption.  The court also found that the
regulations  did not frustrate relevant international
agreements, stating that  strict  uniformity was not
required  by  these  agreements and  that  the
international  agreements   in  this  field  only
established minimum  standards.  The court also
declined to  consider new treaty-based arguments
raised for the first time by EPA  on appeal.

With respect to field preemption, the court observed
that in Ray v. Atlantic Richfield  Co., 435 U.S. 151,
55 L  Ed. 2d 179, 98 S.  CT. 988 (1978), the
Supreme Court decided that in enacting the PWSA
Congress had effectively preempted the  field of
tanker design and construction, but not all other
potential avenues  of state regulation. The Ninth
Circuit found that "virtually all of the challenged
BAP   regulations  impose  operational
requirements   rather  than   design  and
construction requirements."  Thus, the court
found  that  these  requirements  were not
automatically subject to preemption under Ray.
However, the court did find that  the State's BAP
regulatory provisions that addressed navigation
and emergency towing equipment (§ 317-21-
265(1)  &  (2))   did   constitute  design  and
              construction  requirements,
              preempted by the PWSA.
which  were
              Finally, the court addressed whether any of the
              BAP  regulations  were expressly  preempted by
              federal law.  Appellants argued that some of the
              BAP  regulations  were expressly  preempted by
              existing  Coast Guard regulations  promulgated
              pursuant to the OPA. However, the court found
              that because § 1018 of the OPA prohibits the
              preemption of state law, the regulations at issue
              were not valid (i.e., the Coast Guard had acted
              beyond the  scope  of its delegated powers).
              Appellants then argued that the BAP regulations
              violated the Commerce Clause (i.e., impermissibly
              burdened  interstate   commerce).    However,
              appellants failed to argue that the incidental burden
              imposed  by  the  BAP regulations  on interstate
              commerce was clearly excessive in relation to the
              "putative  local benefits," or that  BAP  regulation
              "discriminate in favor of in-state interests." Thus,
              the court found this argument to be without merit.

              The court reversed  the district court's grant of
              summary judgment regarding WAC § 317-21-265,
              but affirmed the decision with regard to all other
              challenged BAP regulations.

                     2.  D.C.  Circuit  upholds  majority of
                        NOAA rule implementing  the OPA,
                        adopts   NOAA  construction  of
                        portions of rule, and  vacates  two
                        parts of the rule:

              General Electric  Co. v.  National  Oceanic  and
              Atmospheric Administration, 128  F.3d  767 (D.C.
              Cir. 1997).

              Industry  and  insurance   company petitioners
              challenged the National Oceanic and Atmospheric
              Administration's   (NOAA's)  final   regulation  for
              implementing the Oil Pollution Act.  The final rule
              addressed trustee assessment of natural resource
              damage (61 Fed. Reg 440-510 [1996]).  The final
              rule established  a  three   stage  procedure for
              assessing injuries resulting  from oil spills and for
              implementing  plans to restore damaged natural
              resources.  The three stages  included a  pre-
                                             56

-------
 Issue 15
Water Enforcement Division
ApriM999
assessment phase, restoration planing phase, and
restoration-implementation phase.

Industry petitioners argued that in promulgating the
rule  NOAA acted in an arbitrary and  capricious
manner by allowing the use of contingent valuation
in assessing natural resource damage. Specifically,
industry petitioners argued that NOAA had ignored
its  expert  panel's  recommendations  that  this
technique must  be used pursuant to stringent
standards.  Petitioners also asserted that it  was
arbitrary for NOAA not to bar contingent valuation.
Finally, petitioners maintained that it was wrong to
extend passive use valuations to temporary losses
of natural  resources  (i.e.,  industry  petitioners
argued that passive  loss occurred only where loss
was  permanent).  The court disagreed with all of
these arguments.   The court found that it  was
sufficient that the rule allowed for the use of several
valuation techniques, provided they produce valid
and reliable results.  Moreover, the court found that
it had ruled not to bar contingent valuation in a prior
case (see, Ohio v. U.S. Dept.  of the Interior,  880
F.2d 432, 478 (D.C.  Cir. 1989)). Finally, regarding
temporary passive losses, the court found that the
issue was not ripe for review.

Industry petitioners  also argued that since  OPA
delegated oil  removal authority to the  President,
NOAA exceeded its authority in promulgating a rule
that  provided trustees  with authority to remove
residual oil.   On this issue the court  found  that
NOAA   had  failed  to  adequately  explain  the
differences between the proposed rule and the final
rule, as well as  other issues  regarding  roles,
authority, and responsibility, and, thus, had failed in
undertake reasoned decision making.

Finally, industry petitioners argued that NOAA acted
arbitrarily in including  monitoring and  oversight
costs,  as  well  as administrative,  legal,   and
enforcement  costs within  the   definition  of
"reasonable assessment costs." The court found
that, with regard to monitoring costs, the OPA was
silent.  The court then  found that NOAA's acted
reasonably in finding  that monitoring was an
essential step in restoration. With regard to the
inclusion  of  legal  fees  within  reasonable
assessment costs, NOAA did not oppose vacatur of
              the definition of assessment costs to the extent it
              referred to attorney fees.

              The court identified several  issue on which the
              parties  had  reached agreement  and discussed
              these only to document NOAA's representations.

              Finally,   insurance  petitioners  raised  several
              arguments, none of which the court found  had
              merit. First,  the court  observed  that insurance
              petitioners had no standing to argue that 15 C.F.R.
              § 990.20(b), which would allow trustees  that had
              begun damage assessments under CERCLA to
              switch  to  the  final   rule,  was  impermissibly
              retroactive. The court found that petitioners had
              shown  neither  concrete  nor  imminent  injury.
              Second, the court found that nothing in the plain
              language of § 1002 or § 1006 of the OPA excluded
              the use of passive use values.  Third,  the court
              found that the rule  did not need  to address the
              OPA's liability limits, since the rule did not affect a
              responsible party's  right  to  invoke those  limits.
              Fourth, the court found that the rule did not impinge
              on responsible parties' rights to seek contribution
              from other parties. Finally,  the court found that the
              rule's requirements that  remediation plans  be
              "reliable  and  valid" adequately  constrained the
              trustee's discretion in assessing resource damage.

              The court vacated the definition in 15 C.F.R.
              990.30 of "reasonable assessment costs" to the
              extent it  included  legal  fees,  and vacated §
              990.53(b)(3)(i)'s  authorization   of  residual
              removal authority.  The court adopted  NOAA's
              construction of § 990.51 (trustee must  prove
              causation); § 990.52(d)(3)(ii) (the term estimate
              is synonymous with calculate); and § 990.27(b)
              (trustee must develop site-specific restoration
              plan).  The court upheld the remainder of the
              rule.

                  F.  EPCRA

                      1. Supreme Court holds that where
                        declarative  and   injunctive  relief
                        sought  in  citizen  suit  would  not
                        remedy   respondent's   alleged
                        injuries associated with wholly past
                                              57

-------
 Issue 15
Water Enforcement Division
ApriM999
             EPCRA  violations,  respondent
             lacked standing to maintain the
             suit  and   the  courts   lacked
             jurisdiction to hear the suit:

Steel Co. v. Citizens fora Better Environment, 1998
U.S. LEXIS 1601 (March 4, 1998).

Plaintiff-respondent  Citizens   for   a   Better
Environment  brought  a  citizen  suit   against
defendant-petitioner Chicago Steel and Pickling
Company for past violations of EPCRA seeking
declarative and injunctive relief (petitionerfiled all of
the overdue forms required under §§ 11022 and
11023  prior to the commencement of the citizen
suit). The district court held that because petitioner
had brought its filings up to date by the time the
complaint was filed, the court lacked jurisdiction to
entertain a suit for present violations.  In  addition,
the district court held that  because EPCRA does
not provide  relief for purely past  violations,
respondent's complaint was not a claim upon which
relief  could be  granted.  The Seventh  Circuit
reversed, concluding that EPCRA authorizes citizen
suits for purely past violations.  Petitioners then
sought  review  by  the Supreme  Court,  which
accepted the case to resolve a conflict between the
Sixth and Seventh Circuits.

The Supreme Court stated that the case presented
two issues: whether EPCRA authorizes  suits for
purely past violations; and, whether respondent had
standing to have brought the action. A key focus of
the opinion was on which issue should be decided
first.   The Court declined  to  endorse the
"doctrine  of  hypothetical  jurisdiction" for
purposes  of addressing the merits question
first. Rather, the Court considered the standing
question first,  and held that  because  none of
the  relief  sought  would  have   remedied
respondent's  alleged  injuries,  respondent
lacked  standing  to  maintain  the  suit and,
therefore,  the  Supreme Court and the lower
courts lacked jurisdiction to entertain the suit.

Three Justices wrote separate concurring opinions
and  the  majority  spent  much  of  the  opinion
responding  to   Justice  Steven's  concurrence.
              Justice  Stevens argued that the  Court has the
              authority to answer the statutory  (i.e.,  merits)
              question first and because EPCRA does not appear
              to provide for jurisdiction over citizen suits for past
              violations,  the   Court  should  not decide the
              constitutional issue. The majority  disagreed, and
              found that the  merits  question  of whether  §
              11046(a) permitted the cause of action was not a
              "jurisdictional" question. The majority distinguished
              Gwaltney of Smithfield Ltd,  v. Chesapeake Bay
              Foundation, Inc., 848 U.S.  49 (1987), stating that
              the  relevant statutory  provision in   Gwaltney
              suggested  the  existence  of  subject   matter
              jurisdiction, whereas here,  § 11046(c)  of EPCRA
              should not be read to make the elements of §
              11046(a) jurisdictional.   The Court also asserted
              that  in no case  has it called "the existence of a
              cause of action 'jurisdictional,' and decide that
              question before  resolving a dispute concerning the
              existence of an Article III case or controversy."

              The Court also declined to endorse the concept of
              hypothetical jurisdiction (finding it proper to proceed
              immediately to  the merits despite  jurisdictional
              questions where the merits question is more readily
              resolved and the prevailing  party on  the  merits
              would be the same as the prevailing party were
              jurisdiction  denied), which the Court observed has
              been "embraced" by several Courts of Appeals.
              The Court stated that such a practice "carries the
              courts beyond the bounds of authorized judicial
              action and  thus  offends fundamental principles of
              separation  of powers."

              In addressing the  standing  question,  the Court
              focused on the redressability element  required
              under Article  III standing (the "likelihood that the
              requested relief  will redress  the alleged injury.").
              The Court explained that none of the items of relief
              sought would have served to eliminate  the effects
              of the late  reporting on  respondent or reimburse
              respondent for losses caused by the late reporting.
              The  majority   reasoned  that  the  declaratory
              judgment was of no value  to the respondent. In
              addition, the  Court observed  that the penalties
              authorized  by EPCRA are payable to the U.S.
              Treasury, not respondent and,  thus, the penalties
              did   not  redress   any  injury to  respondent.
              Furthermore,  the Court found that any  'interest in
                                              58

-------
 Issue 15
Water Enforcement Division
ApriM999
attorney's fees is insufficient to create an Article III
case  or  controversy where  none exists  on the
merits of the underlying claim.' Lewis v. Continental
Bank Corp., 494 U.S.,  at 480 (citing Diamond v.
Charles. 476 U.S. 54, 70-71(1986)).

In other concurring opinions,  Justice O'Connor
joined by Justice Kennedy noted that the  Court's
opinion shouldn't be read as setting out a list of
circumstances under which courts  may exercise
judgment in holding off on difficult jurisdiction issues
when the case can be resolved on  the merits in
favor of the same party. Justice Breyer would not
make it a requirement to first address jurisdiction,
then the merits.

       2.  ALJ holds that gravity-based portion
           of EPCRA penalty should be reduced
           100 percent where all criteria of self-
           policing policy are satisfied, and that
           where  the  self-policing  policy is
           inapplicable the ERP allows partial
           reduction:

In the Matter of: Bollman Hat Company, 1998 EPA
App. LEXIS 3 (Mar. 17, 1998).

EPA  filed a complaint alleging respondent  had
committed seven violations of EPCRA for failing to
file toxic chemical release forms several chemicals
over several years. The complaint proposed a civil
penalty of $39,716, which EPA asserted had been
calculated in accordance with EPA's August, 1992
Enforcement Response Policy  (ERP) for EPCRA
section  313.   Respondent acknowledged  the
violations but challenged the penalty amount and
requested a hearing.   Respondent asserted  that
EPA had failed to grant respondent certain penalty
reductions allowed under the ERP for the delisting
of a chemical and for other factors as justice may
allow.

At hearing  EPA disclosed that  it had relied upon
EPA's self-policing policy to  determine what
adjustments should be  made to the gravity-based
penalty set pursuant to the ERP. With regard to
count one, EPA initially calculated a gravity-based
penalty of $25,000 based on the delay, size of the
              business, and amount of chemical of concern used.
              Then EPA had allowed a 75  percent  reduction
              under  the  self-policing  policy  because  the
              respondent had self-disclosed and met eight of the
              nine criteria specified in the  self-policing  policy
              needed to obtain a complete waiver of the gravity-
              based  penalty (as  for the ninth  criterion,  EPA
              asserted  that respondent failed to prevent  future
              violations). Upon reviewing the facts, the ALJ found
              that respondent had  discovered all of the violations
              simultaneously and  had  acted to both achieve
              compliance and prevent future violations. The ALJ
              concluded that respondent had satisfied all nine
              of the criteria needed to obtain  a complete
              waiver of the gravity-based penalty and granted
              a waiver  of  100 percent of  the  gravity-based
              penalty.

              For counts two through five, the ALJ similarly found
              that  because respondent had  self-disclosed the
              violations  prior to EPA action  and, as  explained
              above, had met all nine criteria specified in the self-
              policing policy needed to obtain a complete waiver
              of the gravity-based penalty, complete waivers of
              the gravity-based penalty amount were warranted.

              For count six, EPA asserted it had not reduced the
              $8,893 proposed penalty because respondent had
              not self-reported the violation prior to EPA action.
              Respondent argued that prior to being contacted by
              EPA it had started to gather the data needed to
              complete the reporting form.  The ALJ  found the
              record supported this assertion, but observed that
              respondent had  not notified EPA regarding the
              violation  and efforts to come  into  compliance.
              Based on this, and  the fact that respondent had
              intentionally decided to wait to file the forms  until a
              data collection  system  was  in place,  the ALJ
              concluded the self-  policing policy did not  apply.
              Nevertheless, pursuant to the ERP the ALJ allowed
              a 55 percent reduction for respondent's attitude (30
              percent) and other factors as justice may require
              (25 percent).

              Finally, regarding count seven, the EPA  proposed
              a penalty of $8,893.  The ALJ first corrected  this to
              $9,074 to account for six additional  days  of
              violation, and then reduced this amount 55 percent
                                              59

-------
 Issue 15
Water Enforcement Division
ApriM999
to $4,083  for the  same  reasons  discussed
immediately above.

       3. ALJ  holds   that  in  calculating
          proposed  penalty   for   EPCRA
          violation based on EPCRA ERP the
          Agency may not restrict application
          of adjustment factors contained in
          ERP to settlement only:

In the Matter of:  Catalina Yachts, 1998 EPCRA
LEXIS 4 (Feb. 2, 1998).

Complainant EPA charged respondent  Catalina
Yachts, Inc., with seven counts of violating EPCRA
§ 313 related to its use of specified chemicals in
excess of the applicable threshold quantities and its
failure to submit toxic chemical release forms to the
Administrator and the State. EPA proposed that a
penalty totaling $175,000  be assessed  for these
violations. Respondent asserted that it was a small
business that was initially unaware of its obligations
under EPCRA and that once it became aware of its
obligation to comply with  EPCRA  it did so in a
timely manner.  Respondent  asserted that EPA
indicated that it had used the EPCRA Enforcement
Response Policy (ERP) in calculating the proposed
penalty and that EPA had informed respondent that
the agency had no authority to  reduce the penalty
by more than the 30 percent specified in the ERP.
Respondent argued that because the ERP had not
been promulgated pursuant to notice and comment
rulemaking under the APA rigid adherence  to the
ERP was neither necessary nor lawful.

The ALJ found  that the appropriate  penalty for the
EPCRA violations was  $39,792.   The  ALJ  first
found that count VII should have been calculated on
a  per day basis  since the violation  since the
relevant Form  R was submitted within  one year
(324 days). Therefore, the gravity-based penalty
should  have been $173,274.    Subject to  this
change, the ALJ found prima facie that the ERP
provided  a reasonable basis for determining the
gravity-based penalty.

The ALJ then examined EPA's application  of the
adjustment factors specified in TSCA § 16.  At the
outset, the ALJ noted that  respondent had waived
              any defense regarding inability to pay and the effect
              of the penalty on respondent's ability to continue to
              do business. The ALJ observed that since acetone
              was delisted under EPCRA during the period of the
              alleged violations,  EPA  was  willing to reduce
              penalty 25 percent  ($12,500).  In  examining the
              factors of cooperation and compliance specified in
              the ERP, the ALJ first held that EPA's practice of
              only  considering such  factors  in  settlement
              negotiations was arbitrary and capricious, since
              once the agency has elected to determine the
              penalty according to the ERP it may not " 'pick
              and choose' the provisions  of the ERP with
              which it will comply." The ALJ found that a 15
              percent reduction was warranted for cooperation
              (i.e.,  respondents commitment to  environmental
              compliance), and that  an additional  15 percent
              reduction was warranted because respondent had
              no prior violations and had made good faith efforts
              to comply (combined reduction of $51,982).  The
              ALJ then further adjusted the  penalty based on
              other matters as justice may require.  Here, citing
              Spang & Company, EPCRA Appeal  Nos. 94-3 &
              94-4  (EAB,  Oct. 20, 1995), the ALJ found  that
              previously   incurred environmentally  beneficial
              expenditures totaling  an  estimated  $230,000
              justified a $69,000  credit against the proposed
              penalty.

                     4. ALJ holds that failure to comply with
                        EPCRA   §  311  is  a  continuing
                       violation not  barred by the federal
                       five-year statute of limitation,  but
                       that failure to comply with EPCRA §
                       312 is not a continuing violation and
                        is not barred  under the statute  of
                        limitation:

              In the Matter of: Mafix, Inc., 1998 EPA App. LEXIS
              6 (Feb.  12, 1998).

              EPA  filed a complaint that alleged Mafix  had
              committed six violations of EPCRA, three each of
              §§ 311  and  312,  by failing to submit in a timely
              manner material safety data sheets and emergency
              and hazardous chemical  inventory forms.   The
              Agency sought a civil penalty of $84,000 for these
              violations. Mafix asserted that the violations were
                                             60

-------
 Issue 15
Water Enforcement Division
ApriM999
barred by the applicable federal five-year statute of
limitations.  All the alleged violations occurred at
least five and one-half years prior to when EPA filed
its complaint.

The ALJ focused  on whether  any  of  the six
violations constituted continuing violations, which
had the potential to affect the application of the five-
year statute of limitation. The ALJ observed that
continuing violations have been recognized by
the EAB under RCRA and TSCA. (See, Harmon
Electronics, Inc., RCRA (3008) Appeal No.  94-4
(March  24,  1997);  and Lazarus,  Inc.,  TSCA
Appeals  No. 95-2 (September 30, 1997).  The
ALJ observed that in  determining  whether a
requirement  was  continuing  in nature   key
considerations included the statutory language,
including  relevant  legislative  history,  and
implementing regulatory language.  The  ALJ
noted that the  EAB in  Lazarus stated  that
"words and phrases connoting continuity and
descriptions  of activities  that are typically
ongoing are indications of a continuing nature.
In contrast, a continuing nature may be negated
by requirements that must  be fulfilled within a
particular time frame."

The ALJ observed that § 311 imposed a one-time
filing obligation  that served  an important public
safety and health purpose, and found that both of
the factors supporting finding that the violation of
counts l-lll were continuing violations. The ALJ
stated that the need for the LEPC, the SERC,  and
the fire department to have the MSDS information
did not decrease with the passage of time.  Thus,
the ALJ concluded that only the actual filing of
the MSDS  would satisfy the requirements of
EPCRA § 311 and begin the running  of the five-
year statute of limitations.  The ALJ found that
counts l-lll of EPA's complaint were not barred
by the statute of limitations.

With  regard  to  counts IV-VI,  which involved
violations of EPCRA §312, the ALJ observed  that
the inventory submission requirement  was not a
one-time  event,  but was imposed annually.  The
ALJ found this to be critical (again, citing Lazarus).
The ALJ reasoned that Matrix's failure to submit the
              inventory  forms by the filing date of March  1
              resulted in the accrual of a violation of § 312. He
              added that although Matrix remained obligated to
              comply with the inventory submission requirement
              after  the  March  1  submission  date,  that date
              marked the  end of the  "period  for which the
              offending  party may be held liable under EPCRA
              Section 312 liability." With regard to § 312, the ALJ
              found  the federal five-year  statute of  limitations
              begins to run "from  the time that the owner or
              operator should have filed  the  emergency and
              hazardous chemical inventory form, but didn't."

                 G. Rivers and Harbors Act (RHA)

                    1.  District court holds USAGE did not
                        act in an  arbitrary or capricious
                        manner   when  it  found   that
                        numerous houseboats constituted
                        permanently   moored   floating
                        vessels that required a permit under
                        the RHA:

              U.S. v. Hernandez. 979 F. Supp. 70 (D. P.R.  1997).

              The government brought a class action suit under
              §§ 403 and 409 of the Rivers and Harbors Act
              (RHA) that  sought  injunctive  relief  to compel
              defendants to remove their houseboats from  La
              Parguera  (a  natural reserve  in Puerto Rico that
              contains mangrove forests on the shoreline and a
              series of off-shore cays and bays that are navigable
              waters of the  U.S.).   The  RHA prohibits any
              obstruction of waters of the  U.S., and makes it
              unlawful   to  build,  among  other things,  any
              permanently  moored  floating vessel,  without  a
              permit. Based on a finding that the primary use of
              these  houseboats was as weekend or vacation
              homes, rather than  means of transportation, the
              USAGE determined  that the houseboats were
              permanently moored floating vessels. None of the
              houseboat owners had RHA permits to moor their
              houseboats in La Parguera.

              Following the issuance of cease and desist  orders
              from the U.S. Army Corps of Engineers (USAGE),
              48 owners sought RHA after-the-fact permits to
              moor.  The USAGE denied 41 of these applications,
                                            61

-------
 Issue 15
Water Enforcement Division
ApriM999
based  on the  objections of  EPA, the Fish and
Wildlife Service, (FWS) and the National Marine
Fisheries Service  (NMFS).  Permit denials were
based in part on the fact that the FWS had issued
a biological opinion that stated the issuance of the
relevant RHA permits would have likely jeopardized
the yellowed shoulder blackbird.  In addition, the
court observed that mooring houseboats in  La
Parguera had been found to cause a detrimental
environmental  impact and was  inconsistent with
Puerto Rico's coastal zone management program.

The court reviewed the USAGE'S denial of the RHA
permits to  determine whether  the  agency   had
acted in an arbitrary and  capricious manner.  The
court  observed  that  USAGE  had  thoroughly
investigated the nature  of the houseboats and
concluded that, despite the ability of the houseboats
to  navigate  (albeit  inefficiently),   and  their
possession of locally issued boating licenses, the
primary use of the houseboats was as weekend or
vacation homes. The court also observed that the
RHA provided the  USAGE with broad discretion in
regulating United States  waterways (see, U.S. v.
Alameda  Gateway, Ltd., 953 F.  Supp. 1106  (N.D.
Gal. 1996), and that, after considering the intended
use, navigability, construction, and environmental
impact of the  houseboats, the USAGE made a
rational determination that these houseboats were
permanently moored floating vessels.  The court
concluded that the USAGE had not acted  in an
arbitrary or capricious  manner when  it found
that the houseboats were permanently moored
floating vessels and had denied the RHA after-
the-fact permits.  Accordingly,  the court granted
the government's request for injunctive relief.

The court  also rejected  arguments  by  several
owners that had acquired their houseboats after the
application  proceedings in 1988-90,  and owners
who received a "no-permit-required" letter in  1990,
that they had been denied their due process rights.
Rather, the court  reiterated that non of  these
houseboats had RHA permits as required by § 10,
and stated that those persons who had received the
no-permit-required letter were clearly informed by
letter in 1993 that if they  did not move their  boats
they would be subject to suit. The court also noted
that § 10  does  not require that the USAGE hold a
              hearing prior to making a determination.  It added
              that the "no-permit- required" owners had received
              notice of their alleged violations in 1990.

                  H. Clean Air Act (CAA)

                     1.  Fourth  Circuit  holds  that EPA's
                        interpretation of its benzene fugitive
                        emission   NESHAP  should   be
                        afforded  deference,  but  that  the
                        small plant exemption provisions of
                        the rule  are insufficient to provide
                        fair notice absent actual notice:

              U.S. v. Hoechst Celenese Co.. 128 F. 3d 216, 1997
              U.S. App. LEXIS 29362 (4th Cir. Oct. 27, 1997).

              The United States brought suit on behalf of EPA
              against Hoechst Celenese Corp., (HCC) for alleged
              violations of the benzene fugitive emission source
              National Emission Standard for  Hazardous Air
              Pollutants (NESHAP) (40C.F.R. Part 61, Subparts
              a, J, and V)  at HCC's Celriver plant in Rock Hill,
              South Carolina.  These regulations exempt' "any
              equipment in benzene service that is located at a
              plant site designed to produce or use less than
              1,000  megagrams of benzene per year." ' (40
              C.F.R. §  61.110(c)(2)).   HCC  interpreted  this
              exemption as exempting   their  Celriver  plant
              because it did not  consume  more  than 1,000
              megagrams of benzene per year. EPA asserted
              that HCC's Celriver  plant did not qualify for the
              exemption and,  even  if it did qualify for the
              exemption, HCC  could  not  claim exempt status
              because it had  never  applied to EPA for the
              exemption. The  district  court had  upheld EPA's
              interpretation of the regulations, but found that HCC
              lacked fair notice of  EPA's interpretation of the
              exemption and, therefore,  refused to hold  HCC
              liable for any violations of the regulations.

              On appeal, the 4th Circuit considered two issues: 1)
              whether EPA's interpretation of its own regulation
              should be afforded deference; and 2) whether and
              when  HCC  was  afforded  fair  notice  of EPA's
              interpretation of the benzene rule exemption.
                                             62

-------
 Issue 15
Water Enforcement Division
ApriM999
The  court found that the plain language of the
regulation did not indicate any intent to  limit the
meaning  of  the  term  "use" to  consumption.
Moreover, the court found that EPA's interpretation
of the term "use" was logical and consistent with
both the  purpose of the Clean Air Act  and the
purpose  of the exemption itself (a "small plant
exemption").  The 4th  Circuit thus agreed  with
the district court that EPA's interpretation of its
own regulations deserved deference.

With regard to the  fair  notice issue, the court
considered two distinct time frames: 1) the period
from  1984,  when  the  benzene   rule  was
promulgated,  to  1989, when EPA first  became
aware of  the violation and contacted HCC; and 2)
the period that followed contacts between EPA and
HCC until 1992, when HCC came into compliance
with the regulations.  With regard to the first time
frame, EPA argued that the term  "use" is a broad
term and  that the exemption at issue should have
been interpreted narrowly by HCC.   EPA  also
asserted  that the  purpose of the exemption—to
exempt  small plants—clearly did  not  support
application to the large Celriver plant. However, the
court focused on whether in this specific  instance
defendant HCC lacked reasonable notice regarding
the scope of the regulations. The court declined to
hold  that  the regulations, their preamble, or their
purpose,  "clearly  put  HCC on  notice that the
Celriver plant did not qualify" for the exemption.
Moreover, the court declined to find that HCC had
reason to know its "exemption claim rested on
extremely shaky grounds" and, therefore, triggered
a duty to  request clarification  from the EPA.
Rather, the court concluded that HCC's contacts
with the Texas Air Control Board (TACB) and EPA
Region 6, regarding two other HCC facilities located
in Texas, gave HCC reason to believe  that "its
interpretation  of the exemption—equating 'use' to
'consumption,' was accurate." Based on this, and
              references in the rulemaking record that equate
              use of the term 'use' with 'consume,' the court
              concluded that HCC had not received fair notice
              of EPA's interpretation between 1984 and 1989.

              The  court  further  found  that  the benzene
              NESHAP did not provide fair notice that a plant
              owner must apply for the small plant exemption,
              nor did it provide fair notice that the owner of
              an exempt plant must file an initial report.

              With regard to the 1989-1992 time period, the court
              observed that  EPA had  contacted HCC in June,
              1989, to clarify the scope of the exemption and
              suggest that the Celriver plant may very  well be
              subject to the benzene NESHAP. The court noted
              that internal HCC minutes (July 1989) indicated the
              company understood the implications of the EPA
              letter addressing interpretation of the exemption (a
              second, more definitive letter was sent from EPA to
              HCC  in  August,  1989).   Thus,  the  court
              concluded that EPA's  1989  communications
              were sufficient to  put HCC on notice of EPA's
              interpretation  of  the   benzene   NESHAP
              exemption and HCC was liable for violation of
              that NESHAP  from August, 1989, until it came
              into compliance.  The court affirmed the district
              court's order except  "as  to whether after August
              1989,  HCC   Celriver   had  notice  of  EPA's
              interpretation of the NESHAP exemption"  and the
              court remanded the case for the reconsideration of
              applicable penalties.

              Judge Niemeyer dissented from the finding that
              HCC had received fair  notice following  August,
              1989. The dissent found  that is was unreasonable
              and unfair to impose penalties in a situation where
              the language of the relevant rule was not clear and
              HCC relied on the interpretation of one EPA Region
              over another, highlighting the fact that  EPA itself
              "could not agree on the proper reading of its own
              regulation."
                                            63

-------
 Issue 15                         Water Enforcement Division                       April 1999
                                     INDEX OF CASES

Alaska Center for the Environment v. West, 1998 U.S. Dist. LEXIS 6644 (D.AL, April 30, 1998)	  22
Allegany Environmental Action v. Westinghouse Electrical Corp., 1998 U.S. Dist. LEXIS
    1846 (W.D. Pa. Jan 30, 1998) 	  2
American Forest & Paper Ass'n v. U.S. EPA, 137 F.3d 291 (5th Cir. 1998)  	  11
American Forest & Paper Ass'n v. U.S. EPA, 154 F.3d 1155 (10th Cir. 1998)  	  36
American Rivers v. Federal Energy Regulatory Commission, 129 F.3d 99 (2nd Cir. 1997)	  15
Ashoffv. City of Ukiah. 130 F.3d 409 (9th Cir. 1997)  	  50
B & B Partnership v. United States. 1997 U.S. App. LEXIS 36086 (4th Cir. Dec. 24, 1997)  	  19
Bayou Des Families Development Co. v. United States, 130 F.3d 1034 (Fed. Cir. 1997)	  17
Borden Ranch Partnership v. U.S. Army Corps of Engineers, 1998 U.S. Dist. 1955
    (E.D. Cal.  Jun. 9, 1998)	  23
Charfoos and Co. v. West. 1998 U.S. Dist. LEXIS 7112 (E.D. Mich. 1998)	  30
Citizens Interested In Bull Run v. R.L.K. & Co.. 1998 U.S. App. LEXIS 3926 (9th Cir. Mar. 4,  1998)  .  16
Coalition for a Livable West Side v. NYC PEP. 1998 U.S. Dist. LEXIS 1955
    (S.D. NY.,  Feb. 20, 1998)	  38
Comfort Lake Assoc. v. Dresel Contracting, Inc., 1998 U.S. App. LEXIS 3733
    (8th Cir. Mar. 5 1998)	  37
Cornerstone Realty, Inc. v. Dresser-Rand Company and Ingersoll-Rand Company, 1997
    U.S. Dist. Lexis 21740 (D. Conn. September 30, 1997)	  51
Cristina Investment Corp. v.  United States, 40 Fed Cl. 571 (1998)	  32
Cross Timbers  Concerned Citizens v. Jane Saginaw, Regional Administrator, U.S. EPA,
    Region IV: and Paul Johnson, Chief, U.S. Department of Agriculture, 1997 U.S.  Dist.
    Lexis 20346 (N.D. Texas, December 16, 1997)	  33
Friends of the Earth v. Chevron Chemical, 129 F.3d 826 (5th Cir. 1997)  	  36
General Electric Co. v. National Oceanic and Atmospheric Administration, 128 F.3d 767
    (D.C. Cir.  1997) 	  56
Grine v. Coombs. 1997 U.S. Dist. LEXIS 19578 (W.D. Pa. Oct. 10, 1997)	  54
Heck and Assoc., Inc. v. United States, 1998 U.S. App. LEXIS 1003 (Fed. Cir. Jan. 23, 1998) 	  18
In re: Arizona Municipal Storm. 1998 NPDES LEXIS 1 (May 21, 1998)	  14
In re: General Motors Corporation, 1997 CWA LEXIS 13 (Dec. 24,  1997)	  45
In re: Ketchikan Pulp Company, CWA Appeal No. 96-7 (May 15, 1998)  	15, 45
In re: NE Hub Partners. 1998 UIC LEXIS 1 (May 1, 1998)	  49
In the Matter of: B.J. Carney Industries, Inc., 1998  CWA LEXIS 1 (Jan. 5, 1998)  	  45
In the Matter of: Bollman Hat Company,  1998 EPA App.  LEXIS 3 (Mar. 17, 1998) 	  59
In the Matter of: Catalina Yachts. 1998 EPCRA LEXIS 4 (Feb. 2, 1998)  	  60
In the Matter of: Heating Oil Partners. 1998 CWA LEXIS 8 (Sept. 21, 1998)	  46
                                            64

-------
 Issue 15                          Water Enforcement Division                        April 1999
In the Matter of: Indoor Air Quality, 1997, No. Docket CAA - III-074  	  39
In the Matter of: Mafix. Inc.. 1998 EPA App. LEXIS 6 (Feb. 12, 1998)	  60
In the Matter of: Parke-Davis Division Warner-Lambert Co., 1998 RCRA LEXIS 2 (Jan. 2, 1998) ...  53
In the Matter of: Philadelphia Macaroni Co.. 1998 CWA LEXIS 5 (May 28, 1998) 	  47
Inn of Daphne, Inc., v. The United States of America, 1998 U.S. Dist. LEXIS 13991
    (S.D. Al. Aug. 26, 1998)	  30
International Assoc. of Independent Tanker Owners v. Gary  Locke,  1998 U.S. App. LEXIS
    12894 (9th Cir.  Feb. 4, 1998)	  55
Johnson v. U.S. Army Corps of Engineers, 1998 U.S. Dist. LEXIS 8422 (D. MN June 1, 1998)	  24
Miccosukee Tribe v. United States, 1998 U.S. Dist. LEXIS 15838 (Sept.  14, 1998) 	  10
Montana v. U.S. Environmental Protection Agency, 137 F.3d 1135 (1988)	  8
Mutual Life Insurance Co. v. Mobil Corp.. 1988 U.S.  Dist. LEXIS 4513 (N.D.N.Y. Mar. 31, 1998)	  2
Mylith Park Lot Owners Assoc. v. U.S. Environmental Protection Agency, 1998 U.S. Dist.
    LEXIS 3227 (Mar. 17, 1998)	  31
National Mining Association v.  U.S. Army Corps of Engineers, 145 F. 3d 1399 (D.C. Cir., 1998) ....  21
National Wildlife Federation v.  Browner, 127 F.3d  1126 (D.C. Cir. 1997)  	  9
Oregon Natural Desert Association v. Dombeck, 151 F.3d 945 (9th Cir. 1998)	   6, 17
Resource Investment v. Corps of Engineers, 151 F.3d 1162  (9th Cir. 1998)	  1
Robbins v. The United States.  1998 U.S. Claims LEXIS 32 (Feb. 20  1998)  	  26
Roland Dubois v. U.S. Department of Agriculture,  1998 U.S. Dist. LEXIS 15198 (D. N.H.
    Sept. 30,  1998)  	  35
San Francisco Baykeeper v. City of Saratoga, 1998 U.S. App. LEXIS 3942 (March 5, 1998)	  13
Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 1998
    U.S. Dist. LEXIS 3994 (D.N. IL E, March 25, 1998)	  27
State of Missouri v. City of Glasgow, 1998 U.S. App. LEXIS 18339 (8th Cir. Aug. 10, 1998)  	  12
Steel Co. v. Citizens for a Better Environment, 1998 U.S. LEXIS 1601 (March 4, 1998)	  58
Stewart v. Potts, U.S. Army Corps of Engineers, 1997 U.S. Dist. LEXIS 17388 (S.D. Tex.
    Oct. 30 1997)	  34
Tozzi v. U.S. Environmental Protection Agency,  1998 U.S. Dist. LEXIS 6234 (D.C. Cir.
    Apr. 21, 1998)  	  53
Trinity American Corp. v. U.S.  EPA. 1989 U.S. App.  LEXIS 17751 (4th Cir. Aug. 4, 1998)	  48
U.S. v. ConAgra. Inc.. 1997 U.S. Dist.  LEXIS 21401  (D. Id. Dec. 31,  1997)  	   3, 42
U.S. v. Deaton. Action No. MJG-95-2140 (Jun. 23, 1998)	  27
U.S. v. Feinstein. Case No. 96-232-CIV-FTM-24 (D), Decided June  12, 1998  	  26
U.S. v. Gulf Park Water Co.. 1995 U.S. Dist. LEXIS 12802 (S.D. Miss., Mar. 11, 1998)	  44
U.S. v. Hallmark Construction Company, 14 F. Supp. 2d 1065 (N.D.  II. Sept. 9, 1998)	  28
U.S. v. Hallmark Construction Company, 1998 U.S. Dist. LEXIS 11892 (D. Illinois, July 23, 1998) ...  28
U.S. v. Hartsell. 127 F.3d 343 (4th Cir. Mar. 11 1997)  	  1
U.S. v. Hernandez. 979 F. Supp. 70 (D. P.R. 1997)  	  61
                                            65

-------
 Issue 15
Water Enforcement Division
ApriM999
U.S. v. Hoechst Celenese Co.. 128 F. 3d 216, 1997 U.S. App. LEXIS 29362
    (4th Cir. Oct. 27, 1997)  	 62
U.S. v. Krillich.  126 F.3d 1035 (7th Cir. 1997)	 40
U.S. v. Municipal Authority of Union Township, 1998 U.S. App. LEXIS 16440
    (3rd Cir. July 20, 1998)	 39
U.S. v. Power Engineering Co., 1998 U.S. Dist. LEXIS 8650 (June 10, 1998)  	 52
U.S. v. Smithfield Foods. Inc.. 972 F. Supp. 338 (E.D. Va.  1997)	 42
U.S. v. Smithfield Foods. Inc.. 1997 U.S. Dist. LEXIS 18934 (E.D. Va. Nov. 26, 1997)	 43
U.S. v. TellurideCo.. No. 97-1236 (10th Cir. June 25, 1998) 	 41
U.S. v. West Indies Transport, Inc., 127 F.3d 299 (3rd Cir. 1997)	  5
U.S. v. Wilson.  1997 U.S. App. LEXIS 35971 (4th Cir. Dec. 23, 1997)	20, 47
Upper Chattahoochee Riverkeeper Fund, Inc., et al., v. City of Atlanta, 1997 U.S. Dist.
    LEXIS 20334 (N.D. Ga. Nov.  17, 1997)  	  7
Waste Action Project v. Dawn Mining Corp., 137  F.3d 1426 (9th Cir.  1998)	  6
Water Works and Sewer Board City of Birmingham v. U.S. Army  Corps of Engineers,
    1997 U.S. Dist.  LEXIS 17215 (N.D. Al. Oct. 22, 1997)	 24
Weatherby Lake Improvement Company v. Browner, No. 96-115-CV-W-8 (W.D. Mo.
    Aug. 17, 1997)	 34
Wilson v. Amoco Corporation, 1998 U.S. Dist. LEXIS 57 (D. Wyo. Jan. 2, 1998)	 51
                                            66

-------