The Army Corps of Engineers has acknowledged that neither Perry Homes, its subsidiaries nor its contractors sought a “jurisdictional determination” before filling the wetlands at the Woodridge Village construction site. Further, the Corps is now investigating whether those wetlands do fall within its jurisdiction and would have required a permit to fill.
We are a long way from determining whether there was any wrongdoing in that case and I am not alleging any.
But, in general, what could possible penalties be in wetlands cases and how are they determined? Several documents found on the EPA website give insight into how they think and assess penalties. Below is a summary plus links to the documents and several additional useful pages on the EPA enforcement website.
Corps and EPA Share Responsibility for Enforcement
The Corps of Engineers and EPA share responsibility for enforcing Section 404 of the Clean Water Act, which covers wetlands. Both civil and criminal penalties can apply to wetlands violations depending on circumstances. This page on the EPA’s site explains the shared authority.
Goals of Enforcement Program
EPA’s Section 404 enforcement program has three goals:
- Protect the environment and human health and safety
- Deter violations
- Treat the regulated community fairly and equitably.
Factors Considered in Initiating an Enforcement Action
A wide variety of factors determine whether EPA initiates an enforcement action. They include:
- Amount of fill
- Acres of wetlands filled
- Environmental significance
- Discharger’s compliance history
Largest Criminal Action in EPA History
At one end of the spectrum, you have criminal cases. Since enactment of the Clean Water Act, EPA and the Corps have used their criminal enforcement authorities sparingly, only for the most flagrant and egregious Section 404 violations. The most significant case ever:
- On February 25, 2005 in the Southern District of Mississippi, a jury convicted Robert J. Lucas, Jr., his daughter, Robbie Lucas Wrigley, and his engineer, M.E. Thompson, Jr., on all 41 counts of an indictment which charged violations of Sections 402 and 404 of the Clean Water Act, mail fraud and conspiracy.
- Lucas developed and sold hundreds of lots in the Big Hill Acres subdivision that impacted approximately 260 acres of wetlands without Corps of Engineers’ permits.
- In developing the lots, Lucas filled wetlands for the construction of driveways and septic systems. The construction persisted after Lucas was ordered to desist by EPA and other agencies.
- Wrigley sold lots and otherwise participated in the conspiracy knowing that the lots were saturated and could not support septic systems.
- M.E. Thompson, a professional engineer, wrongfully certified that the lots were suitable for septic systems, even after being told by the local health department to the contrary.
- In December 2005, the District Court sentenced Lucas to 108 months in prison and Wrigley and M.E. Thompson, Jr. to 87 months apiece. The court fined each of the Defendants $15,000, assessed restitution of $1,407,400 for each Defendant and fined Lucas’s two companies Big Hill Acres, Inc., $4,800,000 and Consolidated Investments, Inc., $500,000.
- The case represents the most significant criminal wetlands case in the history of the Clean Water Act.
- The Decision was affirmed on appeal and the Supreme Court refused to consider it.
Factors Considered in Assessing Fines
At the other end of the spectrum, you have civil penalties with fines that can range from slaps-on-the-wrist to substantial.
This document explains how the agencies determine penalties. They use multiple factors, each with weighting, that are fed into a formula. EPA designed the formula to:
- Require violators to promptly correct violations
- Remedy harm caused by violations
- Recover any economic benefit that accrued to violators, thereby assuring a level playing field for those who obey the law
- Deter future violations
- Promote fair and equitable treatment nationwide
- Promote expeditious resolution (fast settlement)
Section 309 (d) of the CWA sets penalty factors for judges to use when determining the appropriateness of civil penalties.
- Seriousness of violations
- Economic benefit resulting from violations
- History of violations
- Good faith efforts to comply
- Economic impact on violators
- Other matters as justice may require
They refer cases to the Department of Justice when court ordered injunctive relief is necessary to remedy a violation, or when the violator has failed to comply with an administrative compliance order or consent order.
Formula Used in Assessing Fines
When calculating minimum settlement penalties, they use the following formula.
Penalty = Economic Benefit + (Preliminary Gravity Amount +/- Gravity Adjustment Factors) – Litigation Considerations – Ability to Pay – Mitigation Credit for Supplemental Environmental Projects
This determines the minimum penalty amount that the government will accept in the settlement of a case, in other words, “the bottom-line penalty” amount.
Economic Benefit Component Explained
Persons who violate the CWA by discharging dredged and/or fill material without Section 404 permit authorization or in violation of a permit may have obtained an economic benefit by obtaining an illegal competitive advantage (“ICA”), or as the result of delayed or avoided costs, or by a combination of these or other factors.
The objective of calculating and recovering economic benefit is to place violators in no better financial position than they would have been had they complied with the law.
Gravity Component Explained
The “gravity” component of the calculation considers whether the discharge endangers the health and welfare of persons. The greater the threat, the higher the weight. If the discharge has resulted in an imminent and substantial endangerment, they will apply the highest value for this factor.
Secondary or Off-Site Impacts such as the extent to which discharges caused erosion and downstream sedimentation problems are considered.
Judges also consider the duration of violation. That’s the length of time that fill material has remained in place. Generally, the longer the duration, the higher the weight assigned to this factor.
Judges can also apply a Recalcitrance Adjustment Factor. The “recalcitrance” factor may be used to increase the penalty based on a violator’s bad faith, or unjustified delay in preventing, mitigating, or remedying the violation in question.
As distinguished from culpability, recalcitrance relates to the violator’s delay or refusal to comply with the law, to cease violating, to correct violations, or to otherwise cooperate with regulators.
Classes of Penalties
Section 309(g) of the Clean Water Act establishes two classes of administrative penalties. They differ with respect to maximum assessment for violations.
A Class I penalty may not exceed $11,000 per violation, or a maximum amount of $27,500.
A Class II penalty may not exceed $11,000 per day for each day during which the violation continues, or a maximum amount of $137,500.
EPA may also seek:
- Injunctive relief
- Criminal penalties (fines and/or imprisonment),
- Civil penalties through judicial action.
Criminal Vs. Civil
When the Agency refers cases to the Department of Justice (DOJ) for civil and/or criminal enforcement under Section 309(d), EPA may seek civil penalties of up to $27,500 per day for CWA violations including the unauthorized discharge of fill.
Criminal prosecution in wetlands cases usually involves someone who knowingly or negligently discharges fill, makes false or misleading statements on permit applications, or endangers other people.
For More Information and Exact Text
The discussion above summarizes 32-pages of technical/legal EPA and Army Corps documents. I urge you to consult the sources directly for their exact wording.
- Clean Water Act (CWA) Section 404 Settlement Penalty Policy
- Injunctive Relief Requirements in Section 404 Enforcement Actions
- Guidance on Judicial Civil and Criminal Enforcement Priorities
Other useful links, for those seeking even more information, include:
- Clean Water Act Section 404 Permit Program
- EPA Water Enforcement
- EPA Criminal Enforcement
- U.S. Army Corps of Engineers Regulatory Webpage
Posted by Bob Rehak on 11/18/2019
811 Days since Hurricane Harvey
The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.