U.S.A. v. Lexington-Fayette Urban County

Jan 7: In the U.S. Court of Appeals, Sixth Circuit, Case No. 08-6296. The district court in this case refused to approve a proposed settlement of a Clean Water Act suit brought by the United States and the Commonwealth of Kentucky against the Lexington-Fayette Urban County Government. The sticking point was a proposed civil penalty of $425,000 that the district court found could be better directed toward alleviating the conditions that violated the Clean Water Act. The Appeals Court ruled, "Such a concern by itself cannot support rejection of an otherwise proper settlement, in light of the express provision for civil penalties in the Clean Water Act. Remand is therefore required."

According to the opinion, the United States, the Commonwealth, and Lexington ultimately reached a settlement agreement, embodied in a proposed consent decree, that would require Lexington to bring its sanitary and storm sewer systems into compliance with the Clean Water Act at an estimated cost, according to the United States, of $250 million to $300 million. The proposed consent decree also would require Lexington to complete two Supplemental Environmental Projects (estimated to cost $1.23 million) and two Commonwealth environmental projects (estimated to cost $1.50 million) and to pay the United States a $425,000 civil penalty. The parties assert that they negotiated the proposed consent decree in good faith. Although Lexington agreed to the entry of the proposed consent decree “without further notice,” Lexington maintains that its agreement to the terms of the proposed consent decree is neither “an admission of liability” nor “an adjudication or admission of any fact or law.”

The settlement was noticed and eighteen public comments were received; four comments remarked that the $425,000 civil penalty was too high and that the money could be better used to bring Lexington’s sewer systems into compliance with the Clean Water Act. The U.S. responded to comments indicating, "It is customary to include substantial penalties for past non-compliance in consent decrees as an important component of enforcement and to operate as a deterrent to future non-compliance by the defendant and by others. It sends an important message to all municipal dischargers that non-compliance is far from free, and that expeditious efforts to improve [a] system are worth the cost."

The district court ruled, "The Court agrees with the commenters who were concerned that the [civil] penalties were too high and that the penalty money could be better applied to the work required under the Consent Decree. . . Present day taxpayers and sewer services users should not be severely penalized for longstanding neglect on the part of the defendant. A large portion of the penalty money could be better utilized by additional [Supplemental Environmental Projects] or by application of a portion of the penalty money to remedial work required by the Consent Decree." The district court denied the United States’ motion for reconsideration, and the U.S. appealed.

The Appeals Court explained further its remand decision saying, "The only stated basis for the conclusion that the proposed penalty was too high was that the money would be better used by Lexington for remediation of 'longstanding' violations. While this may be so, such a consideration conflicts with the determination of Congress that civil penalties are appropriate in the case of Clean Water Act violations. Rejecting a civil penalty as too high because of the greater seriousness of the violation, or because the penalty money could be used for remediation, is in tension with, rather than in accordance with, the statutory purpose behind civil penalties. In most Clean Water Act cases, the more serious the violation, the more that penalty money could be used for remediation. If Congress thought a violator’s money would be better spent that way, Congress would hardly have provided for civil penalties."

Access the complete opinion and separate concurring opinion (click here).