United States v. Swinerton Builders

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 UNITED STATES OF AMERICA, et al., Case No. 24-cv-00274-EMC 8 Plaintiffs, ORDER GRANTING MOTION TO 9 v. ENTER INTO CONSENT DECREE 10 SWINERTON BUILDERS, Docket No. 15 11 Defendants. 12 I. FACTUAL & PROCEDURAL BACKGROUND 13 The United States moves to enter this Consent Decree following Defendant Swinerton’s 14 alleged violations of the Clean Water Act (CWA) and related state laws during the construction of 15 solar energy facilities in Alabama, Illinois, and Idaho. Swinerton is a national construction 16 company that built four solar energy facilities: the American Falls Site near American Falls, 17 Idaho; the AL Solar Site near LaFayette, Alabama; the Prairie State Site in Perry County, Illinois; 18 and the Big River Site in White County, Illinois. Docket No. 1 (Complaint) at ¶ 54. The 19 Complaint alleges that Swinerton failed to obtain required permits for construction stormwater 20 discharges under the CWA, 33 U.S.C. § 1319 (b), the Alabama Water Pollution Control Act, and 21 the Illinois Environmental Protection Act. The Complaint alleges that Swinerton engaged in the 22 following actions: 23 (1) in Idaho, Swinerton failed to obtain an NPDES permit and discharged, without 24 authorization, sediment-laden stormwater from the American Falls Site, id. ¶ 120 -121 25 (2) in Alabama, Swinerton discharged sediment-laden stormwater from unauthorized 26 discharge points and failed to comply with the terms of its state-issued permit at the AL Solar Site, [27] id. ¶¶ 130-132, 136 ; and 1 Prairie State Site and Big River Site, id. ¶¶ 141, 146 . 2 The Complaint alleges that the unauthorized discharges of sediment from the Idaho and 3 Alabama sites caused harm to the impacted receiving waters that has not been redressed. Id. ¶¶ 4 122, 133. 5 This proposed Consent Decree is a result of negotiations between the parties. It (1) 6 imposes on Swinerton injunctive relief to redress the environmental harms of its violations and (2) 7 charges civil penalties. The Consent Decree was subject to a 30-day period for public comment 8 after Notice was published in the Federal Register on January 25, 2024. See 28 C.F.R. § 50.7 . 9 The comment period closed on February 26, 2024, and there were no public comments. Docket 10 No. 15 at 3. 11 Now before the Court is Plaintiff’s motion to enter into the consent decree. Docket No. 15. 12 Swinerton does not oppose the motion. The Court requested supplemental briefing on several 13 matters, to which both parties submitted briefing. Docket No. 26 (United States Supp. Brief), 14 Docket No. 27 (Swinerton Supp. Brief). 15 II. LEGAL STANDARD 16 Courts may approve a proposed consent decree when it is “fundamentally fair, adequate 17 and reasonable” and “conform[s] to applicable laws.” United States v. Oregon, 913 F.2d 576 , 580 18 (9th Cir. 1990). Courts consider consent decrees in light of the public policy favoring settlement. 19 Sierra Club v. McCarthy, No. 13-cv-03953-SI, 2015 WL 889142 , at *5 (N.D. Cal. Mar. 2, 2015) 20 (citing United States v. Comunidades Unidas Contra La Contaminacion, 204 F.3d 275, 280 (1st 21 Cir. 2000)). “This policy is strengthened when a government agency charged with protecting the 22 public interest ‘has pulled the laboring oar in constructing the proposed settlement.’” United 23 States v. Montrose Chem. Corp. of Cal., 50 F.3d 741, 746 (9th Cir. 1995) (quoting United States v. 24 Cannons Eng’g Corp., 899 F.2d 79 , 84 (1st Cir. 1990)). But when a consent decree affects the 25 public interest, courts have a heightened responsibility to protect those interests so as to safeguard 26 those who did not participate in the negotiations of the decree. Oregon, 913 F.2d at 581 . That 27 said, the consent decree need not “be ‘in the public’s best interest’ if it is otherwise reasonable.” 1 generally United States v. Volkswagen AG (In re Volkswagen “Clean Diesel” Mktg., Sales 2 Practices & Prods. Liab. Litig.), No. 2672 CRB (JSC), 2017 U.S. Dist. LEXIS 76089 , at *813-15 3 (N.D. Cal. May 17, 2017); see also United States v. PG&E, 776 F. Supp. 2d 1007, 1024-25 (N.D. 4 Cal. 2011 ) (Illston, J.) (making many of the same observations). 5 In applying the “fair, adequate and reasonable” standard, courts examine both procedural 6 and substantive fairness. See United States v. Coeur D’Alenes Co., 767 F.3d 873, 877 (9th Cir. 7 2014); Cannons Eng’g Corp., 899 F.2d at 86. Procedural fairness requires arm’s length settlement 8 negotiations, In re Tutu Water Wells CERCLA Litig., 326 F.3d 201, 207 (3d Cir. 2003), and a 9 “negotiation process [that] was fair and full of adversarial vigor,” United States v. Google Inc., 10 No. 12-cv-04177-SI, 2012 U.S. Dist. LEXIS 164401 , 2012 WL 5833994 , at *2 (N.D. Cal. Nov. 11 16, 2012) (internal quotation marks omitted). “[O]nce the court is satisfied that the decree was the 12 product of good faith, arm’s length negotiations, a negotiated decree is presumptively valid and 13 the objecting party has a heavy burden of demonstrating that the decree is unreasonable.” Oregon, [14] 913 F.2d at 581 (internal quotation marks and citation omitted). 15 Substantive fairness requires courts to “find that the agreement is based upon, and roughly 16 correlated with, some acceptable measure of comparative fault, apportioning liability among the 17 settling parties according to rational (if necessarily imprecise) estimates of how much harm each 18 potentially responsible party has done.” Arizona v. City of Tucson, 761 F.3d 1005, 1012 (9th Cir. 19 2014). Courts do not ask “whether the settlement is one which the court itself might have 20 fashioned, or considers as ideal[.]” Cannons Eng’g Corp., 899 F.2d at 84. “Rather, the court’s 21 approval is nothing more than an amalgam of delicate balancing, gross approximations and rough 22 justice.” Oregon, 913 F.2d at 581 (internal quotation marks omitted). The consent decree need 23 only “represent[] a reasonable factual and legal determination.” Id. (internal quotation marks 24 omitted). 25 III. BASIC TERMS OF CONSENT DECREE WITH THE UNITED STATES 26 The Consent Decree has two primary provisions: (1) a civil penalty and (2) injunctive 27 relief. It then has secondary provisions regarding costs, notice, dispute resolution, and other 1 A. Primary Provisions 2 1. Civil Penalty 3 Defendant shall pay a total civil penalty of $2.3 million, with interest accruing from 4 August 23, 2023. Docket No. 15 at 6. $1,614,600 will go to the Department of Justice (DOJ). Id. 5 $540,500 will go to the Alabama Department of Environmental Management. Id. at 7. $144,900 6 will go to the Illinois Environmental Protection Agency. Id. at 7. Defendant shall comply with 7 the processing and notice requirements. 8 Defendant shall pay civil penalties within 30 days after the effective date. Id. at 6. 9 2. Injunctive Relief 10 a. Idaho Mitigation Action 11 Defendant will commit $600,000 to mitigation funds for maintaining sedimentation in the 12 watershed of the American Falls site. Docket No. 4-1 at 40. These funds will be used for Phase 13 One of the Oxbow Project or the Centennial Park Project, which are environmental restoration 14 projects. Id. Swinerton shall propose alternative projects for any leftover mitigation funds. There 15 are also reporting and notice requirements. 16 i. Supplemental Briefing 17 The Court requested further information on how the $600,000 was calculated. Docket No. 18 20. EPA experts quantified the harm of Swinerton’s violations as resulting in 945 tons of excess 19 sediment leaving the construction site and entering the American Falls Reservoir watershed. 20 Docket No. 26 at 6. The $600,000 in mitigation funds will either partially fund a project that will 21 either remove hundreds of tons of sediment per year, or fully fund a project to remove ten tons of 22 sediment per year. These projects would offset Swinerton’s excess discharges within two to 33 23 years. Docket No. 26 at 6. 24 b. Alabama Mitigation Action 25 Defendant shall purchase 14,020 stream credits from one of the US Army Corps of 26 Engineers approved mitigation banks in Alabama. 8. The EPA will review and approve or 27 disapprove of the submissions according to procedural guidelines. Defendant shall purchase 1 While the motion was pending, Swinerton proactively paid $1,184,690 to purchase 14,020 2 stream credits. Docket No. 26 at 7. 3 i. Supplemental Briefing 4 The Court requested further information on how the 14,020 stream credits were calculated. 5 Docket No. 20. EPA experts applied the Army Corps’ of Engineers’ guidelines to estimate that 6 30,535 stream mitigation credits would be required to fully offset the environmental harm from 7 the discharges in Alabama. Docket No. 26 at 7. Because Swinerton disputed their liability of the 8 stream damage, parties settled on a middle ground of 14,020 stream credits. Docket No. 26 at 7. 9 B. Secondary Provisions 10 1. Reporting Requirements 11 Defendant must submit semi-annual reports to the EPA and the United States, detailing 12 compliance with the decree’s requirements. These include status reports on the Idaho Mitigation 13 Action and an update on expended mitigation funds. 11. 14 Defendant shall submit semi-annual reports for the first two years after entering the 15 consent decree. After two years, Defendant shall submit an annual report. The report shall 16 include descriptions of any non-compliance with the Consent Decree and any proposed remedial 17 steps. 12. 18 2. Stipulated Penalties 19 If the Defendant fails to comply with the decree, it is subject to the following stipulated 20 penalties: $18,000 per day for every day of late payment of the above civil 21 penalties. 22 $15,000 per day for every day stream credits are not purchased pursuant to the Alabama Mitigation Action, and $5,000 per day for 23 late submission of relevant documentation. 24 $15,000 per day for every day mitigation funds are not committed pursuant to the Idaho Mitigation Action, and $15,000 per day for 25 every violation of the remaining requirements pursuant to the Idaho Mitigation Action, $5,000 per day for each day the proposed 26 alternative projects are late, $5,000 per day for every day the proposed alternative projects do not meet the criteria, $15,000 per 27 day for every day Defendant fails to implement an EPA approved 1 Defendant shall pay penalties for violating reporting requirements as follows: 2 $2,000 per day for the first 14 days of noncompliance, $4,000 for the 15th through 30th day, and $6,000 for the 31st day and beyond. 3 14. 4 Finally, Defendant shall pay penalties for violating any other requirements of the Consent 5 Decree as follows: 6 $2,000 per day for the first 14 days of noncompliance, $4,000 for the 15th through 30th day, and $6,000 for the 31st day and beyond. 7 14-15. 8 Stipulated penalties are nonexclusive and the United States reserves the right to seek any relief it 9 deems appropriate. 10 The penalties appear proportionate to Swinerton’s size. Cf. United States v. Walnutdale 11 Family Farms, LLC, 2021 U.S. Dist. LEXIS 88438 at *2-3 (W.D. Mich. 2021) (approving an EPA 12 consent decree against a family farm in Michigan with a penalty per violation per day ranging 13 from $250 to $5,000 per day). 14 3. Force Majeure 15 The Consent Decree defines force majeure as events beyond the Defendant’s control that 16 prevent compliance. Defendant must claim force majeure and comply with notice and timing 17 requirements. 18 4. Dispute Resolution 19 Parties submit to informal dispute resolution and then, if unresolvable, to formal dispute 20 resolution. There are procedure and notice requirements. 21 Defendant may also seek judicial review of the dispute resolutions pertaining to the 22 adequacy or appropriateness of plans, procedures to implement plans, schedules or items requiring 23 EPA approval, the adequacy of Defendant’s performance, and all other disputes that are afforded 24 review on the administrative record under applicable principles of administrative law. 20. 25 Defendant has the burden of showing that the Plaintiff’s position is arbitrary and capricious or 26 otherwise not in accordance with law. Defendant bears the burden of demonstrating that its 27 position complies with and furthers the objectives of the Consent Decree. 20-21. 1 Mich. 2021 ) (entering an EPA consent decree against a dairy farm for violating provisions of the 2 CWA and engaging in unlawful discharge and operation of waste storage devices); United States 3 v. Cisne Ny Constr., Inc., 2023 U.S. Dist. LEXIS 78489 at *32-33 (S.D.N.Y. 2023) (entering an 4 EPA consent decree against a construction company for failure to comply with renovation 5 regulations). 6 5. Information Collection and Retention 7 Defendant must maintain and provide access to relevant records and information upon 8 Plaintiffs request, including procedures for claiming confidentiality and privilege. Parties submit 9 to an additional five-year information retention period after the termination of the Consent Decree. 10 6. Effect of settlement/Reservation of Rights 11 Plaintiffs reserve the right to enforce the decree and seek further relief for future violations. 12 7. Costs 13 Parties bear their own costs of the action, except Plaintiffs can recover costs incurred for 14 any additional actions related to Defendant’s noncompliance with the Consent Decree. 15 8. Notices 16 This section lists the main contact information for communications related to the Consent 17 Decree. 18 9. Effective Date 19 The effective date is the date the Court enters the Decree or grants the Motion to Enter the 20 Consent Decree. 21 10. Jurisdiction 22 The Court retains jurisdiction over the case until termination. 23 11. Modification 24 Parties may modify the Consent Decree by (1) a written agreement signed by all parties 25 and (2) Court approval. Parties shall resolve any disputes concerning modification through 26 dispute resolution. Party seeking modification bears the burden of showing that it is entitled to 27 modification pursuant to FRCP 60(b). 1 12. Termination 2 Parties shall jointly stipulate termination of the Decree upon compliance with the Consent 3 Decree’s primary provisions, i.e. civil penalties and injunctive relief. 4 13. Public Participation 5 The Consent Decree shall be lodged with the Court for at least 30 days for public notice 6 and comment. 28 C.F.R. § 50.7 . 7 14. Service, Integration, Identification, Headings, Final Judgment 8 Finally, there are standard requirements for service, a statement that the Consent Decree is 9 completely integrated, the headings are not final interpretations of the Consent Decree, and the 10 Court’s entry of the Consent Decree is a final judgment. 11 IV. DISCUSSION 12 Courts have looked at the following list of factors to decide whether a consent decree is 13 reasonable: 14 • The consent decree’s likely “efficaciousness as a vehicle for cleansing the environment”; 15 • “the extent to which [the consent decree] satisfactorily compensates the public for actual 16 and anticipated costs of remedial and response measures”; 17 • “the relative strength of the parties’ litigating positions”; 18 • “the availability and likelihood of alternatives to the consent decree”; 19 • “the extent to which approval [of the consent decree] serves the public interest.” 20 U.S. v. Fort James Operating Co., 313 F. Supp. 2d 902, 910 (E.D. Wis. 2004). One court has 21 limited its review to the following three factors: “(1) the technical effectiveness of the plan for 22 environmental cleanup; (2) the amount of monetary compensation to the public; (3) the overall 23 fairness of the decree in light of the relative strengths of the parties and foreseeable risks of loss.” 24 U.S. v. National R.R. Passenger Corp., 1999 WL 199659 (E.D. Pa. 1999), aff’d, 235 F.3d 817 (3d 25 Cir. 2000). 26 However, irrespective of factors the reviewing court selects, the trial court gives deference 27 to the agency’s expertise and the parties’ agreement. US v. Cannons Engineering Corp., 899 F.2d 1 agency’s suggestions, neither should it approach the merits of the contemplated settlement de 2 novo”).1 3 Here, the Consent Decree meets the majority of the factors from Fort James and National 4 R.R. Passenger and the Court finds all provisions, despite somewhat concern about the injunctive 5 relief as to the Idaho Mitigation Action, “fundamentally fair, adequate and reasonable” and 6 “conform[s] to applicable laws.” United States v. Oregon, 913 F.2d 576, 580 (9th Cir. 1990). 7 A. Effectiveness for Cleansing the Environment 8 First, the injunctive relief that requires Swinerton to pay substantial mitigation funds and 9 stream credits are effective to restore the environment because they fund environmental restoration 10 projects in the locations that Swinerton allegedly harmed. The restoration project in Idaho will 11 increase sediment capture and therefore remove sediment and improve water quality in the 12 Portneuf River in Pocatello, Idaho. Docket No. 26-1 at ¶ 14 (Dromgoole Decl.); Docket No. 27 at 13 7. The stream credits in Alabama will improve water quality and aquatic habitat in the watershed 14 surrounding the Alabama Solar site. Docket No. 26 at 7. 15 B. Compensation for Remedial and Response Measures 16 Of specific concern is the injunctive relief of the $600,000 in mitigation funds for the 17 Idaho Mitigation Action. This amount may fully fund a project that would remove ten tons of 18 sediment per year. Docket No. 26 at 6. However, because Swinerton’s violations resulted in an 19 estimated 945 tons of excess sediment entering the American Falls Reservoir watershed, the 20 $600,000 in mitigation funds to that particular project could take nearly 100 years to remedy the 21 environmental damage. This may not effectively compensate for the significant harms incurred at 22 the watershed. 23 The second provision of injunctive relief, the 14,020 stream credits for the Alabama 24 Mitigation Action, appears reasonable considering the EPA expert’s calculation of harm equating [26] 1 As another frame of reference, in a CERCLA enforcement case, the Fifth Circuit explained that an appellate court will overturn a district court’s decision to approve the consent decree in a case [27] involving the United States “only for manifest abuse of discretion.” City of Bangor v. Citizens 1 to 30,535 stream credits and Swinerton’s “vigorous” dispute as to its liability. See Docket No. 26 2 at 7. 3 As for the civil penalty, the amount of $2,300,000 appears sufficient to compensate the 4 public for remedial and response measures. Most CWA construction stormwater settlements have 5 imposed civil penalties ranging from $400,000 to $2,000,000, with the highest being over $5.1 6 million adjusted for inflation. See Docket No. 27 at 5; see e.g. United States v. Centex Homes, No. 7 1:08-cv-00605 (2008) (civil penalty of $2,093,089 adjusted for inflation); United States v. Wal8 Mart Stores Inc., No. 1:04-cv-00301 (2004) (civil penalty of $5.1 million adjusted for inflation). 9 Also, at each of the four sites, EPA technical experts used a publicly available financial 10 model to calculate the economic benefits to Swinerton as $421,522. These benefits include, for 11 example, the costs of stormwater controls Swinerton did not install or maintain, inspections it did 12 not conduct, and reports it did not sufficiently complete. $421,522 is only 18% of the total civil 13 penalty of $2,300,000 in the Consent Decree. The penalty also includes other statutory factors 14 including the seriousness of the violations, and repeated violations even after regulator warnings. 15 Docket No. 26 at 5. The civil penalty amount of $2,300,000 appears reasonable in light of similar 16 CWA construction stormwater settlements and the economic benefits to Swinerton for its CWA 17 violations. 18 C. Relative Strength of Litigating Positions 19 Third, the relative strength of the parties’ litigating positions is not well-known because 20 prior to this Motion, the case was only at the Complaint stage. Swinerton did not move to dismiss 21 the complaint, but does appear to generally dispute its liability. 22 D. Alternatives to Consent Decree 23 Fourth, there are no clear alternatives to the consent decree that would remedy the 24 Swinerton’s environmental harms, because the injunction and civil penalties in the consent decree 25 require the Swinerton to fund environmental restoration projects in areas that it caused damage. 26 Parties did consider alternatives such as litigation, and requiring Swinerton to implement corporate 27 compliance measures to prevent future violations at large scale solar construction sites. Docket 1 of solar farms in December 2021, so the latter alternative became moot. Id. at 10. 2 E. Public Interest 3 Finally, approval of the consent decree serves the public interest because it requires 4 Swinerton to pay substantial penalties to the DOJ and state environmental agencies for its 5 significant environmental harms, and fund restoration projects in the specific areas that were 6 damaged. 7 V. CONCLUSION 8 Despite the Court’s concern about the adequacy of the Idaho Mitigation Action fund, in 9 light of the deferential standard to be applied by the Court to the overall proposed decree, the 10 Court GRANTS the motion to enter the Consent Decree. [11] 12 IT IS SO ORDERED. [13] 14 Dated: July 12, 2024 [15] 16 ______________________________________ EDWARD M. CHEN 17 United States District Judge