Californians for Alternatives to Toxics v. Kernen Construction Co.

Background

Californians for Alternatives to Toxics (CAT) sued Kernen Construction Co., Bedrock Investments LLC, Scott Farley, and Kurt Kernen under the federal Clean Water Act and California’s General Industrial Permit for industrial storm-water discharges. CAT alleged that polluted storm water flowed from the defendants’ facility into a creek, then Hall Creek, a tributary of the Mad River, during the period beginning November 14, 2017.

CAT asserted five claims involving alleged unlawful discharges, failure to maintain an adequate Storm Water Pollution Prevention Plan, failure to implement required pollution-control technologies, failure to maintain an adequate Monitoring Implementation Plan, and failure to complete required reporting-related responses. The defendants admitted liability on all five claims. The only remaining issues were civil penalties and injunctive relief.

Civil Penalties

Under the Clean Water Act, civil penalties are mandatory when a violation is established, although the court has discretion to determine the amount up to the statutory maximum. The court considered the statutory factors, including the seriousness of the violations, any economic benefit from noncompliance, the defendants’ history of violations, good-faith compliance efforts, the economic effect of the penalty, and other matters justice may require.

CAT sought $22,940,000 based on 9,461 alleged violations. The defendants asked the court to reduce the violations to five total—one for each claim—and to impose a total penalty of $15,000. The court rejected that proposal, explaining that the Clean Water Act requires penalties for each established violation and does not permit the court to combine violations simply to reduce the penalty.

The court imposed a total penalty of $2,087,750: $110,000 for 11 discharge violations; $557,500 for 1,115 Storm Water Pollution Prevention Plan violations; $557,500 for 1,115 violations involving required technology standards; $557,500 for 1,115 Monitoring Implementation Plan violations; and $305,250 for 6,105 reporting violations.

The court found the actual pollutant discharges serious because sampling showed at least four toxic pollutants—lead, copper, pentachlorophenol, and zinc—and significant exceedances of federal standards. It found the remaining planning, technology, monitoring, and reporting violations less serious than actual discharges but significant because they continued for 1,115 days and could contribute to future unlawful discharges.

The court found that the record did not allow it to estimate any economic benefit the defendants received from noncompliance. It also declined to infer a prior violation history from the earlier related proceeding or from warning letters, because liability had not been established in that proceeding and the letters did not establish violations. The court did not find that the defendants acted in bad faith based on the evidence presented. It reduced the potential penalty in part because a larger penalty would significantly harm the defendants and impair their ability to continue operating the facility, while also considering the amounts they had spent on compliance.

Injunctive Relief and Disposition

CAT requested orders preventing future discharges until the facility complied, potentially requiring collection and treatment of storm water, appointing a special master, or allowing additional discovery about required pollution-control measures. The defendants did not address the request in their briefs.

The court deferred ruling on injunctive relief. It directed CAT and the defendants to meet and confer about possible relief and about discovery needed for CAT’s request. The parties were ordered to file a joint statement within 30 days stating whether CAT intended to continue seeking injunctive relief, describing their discussions, and proposing next steps.

The court therefore granted CAT’s request for civil penalties in the amount of $2,087,750 and deferred ruling on CAT’s request for injunctive relief pending the joint statement.