COMPANY The Board concludes that the presiding officer impermissibly conducted an independent evaluation of the risk posed by ocean disposal of dredged sediments from the Oakland Inner Harbor. Where a Region has made a permit determination under the MPRSA that particular sediments are unsuitable for ocean disposal, the potential of such sediments to cause environmental harm is thereby established, and will be assumed once exposure or potential for exposure exists. Therefore, the Board assesses its penalty for these violations based on the significant element of harm inherent in the ocean disposal of unpermitted sediments, and on the culpability of the Respondent in its dredging and disposal operations. Before Environmental Appeals Judges Ronald L. McCallum and Edward E. Reich. Environmental Appeals Judge Nancy B. Firestone did not participate in this Decision. Opinion of the Board by Judge Reich: Region IX filed an administrative complaint on June 2, 1988, against the Port of Oakland, California (hereinafter "the Port"), a municipal department, and Great Lakes Dredge and Dock Company (hereinafter "Great Lakes" or "Respondent"), a New Jersey company, alleging violations of Section 101(a)(1) of the Marine Protection, Research, and Sanctuaries Act of 1972 (hereinafter "MPRSA" or "the Act"), 33 U.S.C. § 1411(a)(1), and an ocean dumping permit issued to the Port under the MPRSA § 103, 33 U.S.C. § 1413. The Region amended its complaint on September 30, 1988, alleging additional violations by both the Port and Respondent (hereinafter the "First Amended Complaint"). The First Amended Complaint proposes that a penalty of $225,000 be assessed against the Port and a penalty of $175,000 be assessed against Great Lakes.1 A lengthy hearing was held during March and April 1989. On April 4, 1989, the Region made an oral motion for leave to file a Second Amended Complaint, which incorporates the allegations of the First Amended Complaint and alleges additional violations. Tr. v.13 at 178-180. It filed a written motion to the same effect on April 12, 1989. The Second Amended Complaint proposed total penalties of $282,000 against the Port and $225,000 against Great Lakes. The presiding officer deferred ruling on the motion to file the amended complaint pending the receipt of post-hearing briefs.2 On February 28, 1991, after the submission of post-hearing briefs 1The proposed $175,000 civil penalty against Great Lakes is the total of $150,000 for three instances of ocean disposal of dredged unpermitted sediments and $25,000 for five instances of dumping materials at a greater distance from the center of the disposal site than the permit allows (hereinafter referred to as "off-center dumping"). See n.33 infra. 2 Tr. v.13 at 180. by all three parties, the Port entered into a consent agreement with the Region, paying a penalty of $150,000 in compromise of all allegations against it. The presiding officer issued his Initial Decision on October 24, 1991, holding that Great Lakes had committed the three violations involving ocean disposal of dredged unpermitted sediments that were alleged in the First Amended Complaint. However, he reduced the proposed penalty for the violations from $150,000 to $10,000. Initial Decision at 140. He also found that Great Lakes had performed off-center dumping on "at least three" occasions, but assessed no penalty for these violations. Id. at 111. See also id. at 134. He denied the Region's motion to file the Second Amended Complaint. Id. n.1 at 5. The Region has appealed,3 arguing that the presiding officer erred when he reduced its proposed penalties for the violations alleged in the First Amended Complaint; and that he further erred when he denied its motion to file the Second Amended Complaint. The Region asks the Board to assess a total penalty of $215,000 for the violations alleged in the First and Second Amended Complaints, based on the statutory penalty factors. Great Lakes filed a Reply Brief5 in which it argues that the presiding officer's Initial Decision should be affirmed in all respects. The Board held oral argument on June 11, 1992. For the reasons stated below, the Board assesses a total civil penalty of $125,000 for three counts of unlawful dredging and disposal, and three counts of off-center dumping, as alleged in the First Amended Complaint. It affirms the presiding officer's denial of the Region's motion to file the Second Amended Complaint. 3 The Region filed its appeal on December 2, 1991. The Environmental Appeals Board, as the Administrator's delegatee, has authority to decide appeals of initial decisions in MPRSA civil penalty cases. See 57 Fed. Reg. at 5324-26 (Feb. 14, 1992) (revising 40 C.F.R. §§ 22.04(a) and 22.30 to reflect the role of the Environmental Appeals Board as the final decisionmaker in appeals of initial decisions under Part 22). 4 The Region dropped one count of alleged unlawful spillage of dredged materials and reduced its proposed penalties for unlawful spillage from $20,000 to $10,000. Region's Post-Hearing Reply Brief, at 3 n.2 (Dec. 15, 1989). 5 Reply Brief of Great Lakes Dredge and Dock Company (February 3, 1992). COMPANY BACKGROUND I. Statute and Regulations The MPRSA prohibits the ocean disposal, and the transportation from the United States for ocean disposal, of any material unless the activity is authorized by permit. MPRSA § 101, 33 U.S.C. § 1411. The U.S. Army Corps of Engineers (hereinafter "the Corps") has authority to issue permits, with EPA concurrence, for the transportation and ocean disposal of dredged materials. MPRSA § 103, 33 U.S.C. § 1413; 40 C.F.R. §225.2(c), (d), and (e). Generally, the Act provides that ocean dumping may be authorized if it does not “unreasonably degrade or endanger human health, welfare, or amenities, or the marine environment, ecological systems or economic potentialities." MPRSA § 102, 33 U.S.C. § 1412. The Act requires the Administrator to establish regulatory criteria for evaluating proposed ocean dumping, and requires the Corps and the Administrator to apply the criteria in making permit determinations. 40 C.F.R. §§ 225.1, 225.2(c). EPA has issued such regulations at 40 C.F.R. Parts 227 and 228.6 If EPA and the Corps disagree as to whether particular sediments comply with the criteria, EPA's determination prevails.7 Section 105(a) of the Act, 33 U.S.C. § 1415(a), authorizes EPA to assess a civil penalty against any person of no more than $50,000 for each day of each violation of the Act, its regulations, or the terms of any permit issued thereunder. Section 105(a) further provides that EPA shall take into account, in determining an appropriate penalty, the gravity of the violation, any history of prior violations, and demonstrated good faith in attempting to achieve rapid compliance upon notification of an alleged violation. Unlike most statutes that EPA administers, there is no Agency penalty policy specifically for the MPRSA. Therefore, there is no Agency guidance for calculating appropriate penalties for these types of violations other than the Agency's broad-based Policy on Civil Penalties and associated Framework for Statute-Specific Approaches to Penalty Assessment Pursuant to 40 C.F.R. §227.1(a), "Parts 227 and 228 of [the ocean dumping regulations] together constitute the criteria established pursuant to section 102 of the Act." Section 227.1(b) provides that "[a]n applicant for a permit to dump dredged material must comply with all of Subparts C, D, E, and G and applicable sections of B, to be deemed to have met the * ** criteria * * * "9 7There is no administrative appeal to the Corps or to EPA from a permit determination under the MPRSA. See 33 C.F.R. § 320.1(a)(2). The Corps may, under specified conditions, request that EPA waive the regulatory permit criteria and allow the issuance of a permit. 40 C.F.R. §§ 225.3(b) and 225.4. A permit issued under the MPRSA may be challenged by bringing an action in federal court pursuant to the Administrative Procedure Act, 5 U.S.C. §702, and 28 U.S.C. § 1331. See Save Our Sound Fisheries Ass'n v. Callaway, 387 F. Supp. 292, 297–298 (D.R.I. 1974). discussed in section I, infra. In the absence of such guidance, the Board has been required to examine extensively the circumstances of each violation and to relate those circumstances directly to the statutory penalty criteria. II. Factual Background Oakland Inner Harbor contains a navigation channel (hereinafter the "Federal Channel") approximately four miles long and 600 feet wide, located between the cities of Oakland to the north and Alameda to the south. The Corps currently maintains the Federal Channel to a depth of 35 feet Mean Lower Low Water (MLLW). In 1986, Congress enacted legislation 9 authorizing the Corps to deepen the channel from a depth of 35 feet MLLW to a depth of −42 feet MLLW, and to construct an 1,100-foot diameter turning basin at its eastern end so that the Port can more easily accommodate supercontainerships. The Port, which shares the cost of the project with the Corps, entered into a contract with Respondent on April 20, 1988, to perform the dredging for the initial phase of the project. Port Ex 32. Phase I consists of deepening the existing Federal Channel to a depth of 38 feet MLLW and constructing the turning basin. The entire project is ultimately expected to involve about seven million cubic yards of dredged material. On May 3, 1988, after considerable discussion and analysis, EPA Region IX sent a letter to the Corps concurring in the use of Ocean Dredged Material Disposal Site B1B 10 for disposal of dredged material from the Oakland Inner Harbor, conditioned on a prohibition against ocean disposal of sediments from the two areas of the proposed turning basin that lie outside the Federal Channel, referred to in the Port's plans and hereinafter as the “A-1” and “A-2” areas. 11 8 Federal Channels are navigation channels that are dredged and maintained by the federal government. Tr. v.23 at 36. 9 Water Resources Development Act of 1986, P.L. 99–162. 10 Site B1B is located at 37 degrees 29'00" North latitude, 122 degrees 48'00" West longitude, approximately 25 nautical miles southwest of the Golden Gate Bridge, with a radius of 1.0 nautical miles. See EPA Comments on the Oakland Inner Harbor Dredging Project (hereinafter "EPA Comments") at 1. Complainant's Exhibit (hereinafter "C Ex") 1. See also Half Moon Bay Fishermans' Marketing Ass'n v. Frank Carlucci, 847 F.2d 1389, n.1 at 1390 (9th Cir. 1988), amended 857 F.2d 505 (9th Cir. 1988). 11C Ex 1. Letter from EPA Regional Administrator Daniel W. McGovern to Colonel Galen Yanagihara, District Engineer for the Corps, May 3, 1988. EPA's letter stated that, based on chemical analyses and bioassay and bioaccumulation data: COMPANY The A-1 area lies north of the Federal Channel and south of the Schnitzer Steel Company facility. 12 The A-2 area lies south of the Federal Channel and north of the former Todd Shipyard (now the "Alameda Gateway").13 The letter stated that EPA lacked data to evaluate adequately the material below a layer of clay in the A2 area, 14 and, therefore, EPA had assumed that the material below the clay layer posed similar risks to those posed by the material above it. It added that EPA: [W]ill reevaluate our decision if the Corps submits The Corps issued Permit No. 17317E35 ("the permit") to the Port on May 5, 1988, with EPA concurrence. C Ex 2. The project, as described in the permit, involves dredging the existing lower four Only Oakland Inner Harbor dredged material determined to be * site. EPA Comments, appended to the letter, stated that: EPA has determined that only dredged material from Reaches The unsuitable material is approximately 100,000 cubic yards of EPA Comments at 2. As the bases for its conclusion, the EPA Comments cited "Results of Confirmatory Sediment Analyses and Solid and Suspended Particulate Phase Bioassay Tests on Selected Sediment from Oakland Inner Harbor," April 1988 (Comment Draft); and Preliminary Bioaccumulation Test Results for the Oakland Inner Harbor, April 27, 1988. Id. The reports are based on tests that were performed on sediments collected March 21 and March 27, 1988, by Pacific Northwest Laboratory, Battelle Memorial Research Institute, Sequim, Washington, pursuant to a contract with the Port. 12 See Plan for Dredging Oakland Inner Harbor Channel, March 15, 1988. C Ex 21. 13 Id. 14 Although the letter does not identify the prohibited areas as A-1 and A-2, it is undisputed that the intended reference is to those areas. 15 The Corps sent a letter to EPA on June 30, 1988, which, among other things, stated that the Corps now considers that the A-2 sediments below the clay layer are suitable for ocean disposal. Port Ex 17. EPA formally agreed with the Corps in an August 4, 1988 letter that stated that EPA will be modifying its May 3, 1988 concurrence letter to allow ocean disposal of A-2 sediments dredged from below the clay layer. Port Ex 18. |