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 chemicals properly.

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 appropriate consideration?