In the case of Sierra Club v. Cedar Point Oil Co. (73
F.3d 546 (5th Cir. 1996)), Cedar Point was drilling for oil in
Galveston Bay, and dumping chemicals into the water without a permit. EPA
found that this violated the Clean Water Act and assessed penalties.
Under the Clean Water Act, EPA was authorized to
assess a penalty of up to $25k per day for each violation. Cedar Point
was polluting for 809 days, so the maximum penalty was just over $20M.
Based on Clean Water Act §309(d) and the framework
developed in Atlantic States Legal Found. Inc. v. Tyson Foods, Inc.
(897 F.2d 1128 (1990)), the Court used the maximum penalty as a starting
point and then determined if the penalty should be reduced from the
maximum by reference to the statutory factors.
Although there were numerous exacerbating factors, the
Trial Court chose to reduce Cedar Point's penalty to a measly $186k, which
was the economic benefit they had received by not disposing of the
Sierra Club initiated a citizen suit to have the penalties
increased. However, the Appellate Court found that the assessment of penalties
under the Clean Water Act was "highly discretionary". Since
the Trial Court noted all the factors they used in reaching their decision, it
was not an abuse of discretion and therefore must be affirmed.
How was the court able to announce this decision with a
straight face? Their logic is the equivalent of someone getting caught
stealing goods and the only penalty is that they have to give the stolen
good back. There is no deterrence in a penalty like this.
In cases like this, Cedar Point must pay Sierra Club's
attorney's fees. That could add up to be a lot of money. But is that an