UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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HUDSON RIVERKEEPER FUND, INC., :

Plaintiff, :

-against- :

THE NEW YORK CITY DEPARTMENT OF : 94 Civ. 7237 (BSJ)

ENVIRONMENTAL PROTECTION, and

MARILYN GELBER, Commissioner of :

the New York City Department of

Environmental Protection, :

Defendants. :

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Plaintiff, Hudson Riverkeeper Fund, Inc. (Riverkeeper), submits this memorandum in opposition to the motion for summary judgment filed by Defendants The New York City Department of Environmental Protection ("DEP"), and Marilyn Gelber, Commissioner of the DEP. In this citizens enforcement suit under Clean Water Act § 505, 33 U.S.C. § 1365, Plaintiff seeks to enforce a federal permit provision requiring Defendants to maintain at least 72 staff members in their Industrial Pretreatment Program.

Many of the facts underlying the cross-motions for summary judgment in this case are indeed undisputed. The state pollutant discharge elimination system ("SPDES") permit for the New York City Waste Water Treatment Facilities, as modified in July 1991, requires that the DEP "shall [m]aintain minimum staffing positions committed to implementation of the [Industrial Pretreatment Program] at 72 staff members and make good faith efforts to keep those positions filled at all times." Affidavit of Michael McIntosh, Jr. sworn to on November 16, 1995 ("McIntosh Aff.") ¶ 3 & Ex. A at p. 21. Defendants' own admissions establish that from July 29, 1991, until June 1995, the Industrial Pretreatment Program never employed the 72 staff members required by the permit. Id. at ¶¶ 7, 8, 9, & Exs. E, F, G.

It is also undisputed that, despite the availability of qualified candidates during these time periods, Defendants did not hire personnel to fill the vacant positions, giving the existence of "budgetary constraints" and a "hiring freeze" as the only reasons for not hiring. McIntosh Aff. ¶¶ 4, 12 & Exs. B, J. This creates, at the very least, a genuine issue of material fact concerning whether the Defendants truly can be said to have made "good faith efforts" to keep all 72 positions filled at all times. And although the Defendants assert that they can fill the positions through the use of overtime (a proposition that is incorrect as a matter of permit interpretation), Defendants have failed to present competent evidence establishing that its employees in fact worked sufficient overtime to make up for the lack of short staff.

Defendants rely heavily on principles of contract law to argue that literal violation of the permit's staffing requirement is excused by "substantial compliance" through the claimed use of overtime. However, all Clean Water Act authority dictates that strict compliance with permit provisions is required.

A violation of a SPDES permit constitutes a violation of an "effluent standard or limitation" enforceable under § 505 of CWA, 33 U.S.C. § 1365 - the citizen suit provision. See 33 U.S.C. § 1365(f)(6). The interpretation of the terms of a permit is a matter of law for the court. Hudson Riverkeeper Fund, Inc. v. Orange and Rockland Utils., Inc., 835 F. Supp. 160 (S.D.N.Y. 1993); Public Interest Research Group of New Jersey, Inc., v. Hercules, Inc., 50 F.3d 1239 (3d Cir. 1995); California Public Interest Research Group, et al. v. Shell Oil Company, 840 F. Supp. 712, 716 (N.D. Cal. 1993). Thus it is the court's function to determine the meaning of the permit provision. Factors for consideration include the plain language of the permit provision itself, and its interpretation by the issuing agency. See Shell Oil, supra at 716-17.

Defendants premise their entire argument for interpreting the permit to allow overtime instead of staff members on the notion that a Clean Water Act permit should be interpreted as a contract. Defs.' Mem. at 12-23. Indeed, throughout their memorandum, Defendants refer to interpretations of contacts and interpretation of contract clauses. Id. However, Defendants do not cite one authority so interpreting a Clean Water Act permit. As it turns out, the weight of authority is to the contrary: both under the law of New York State (the jurisdiction that issued the permit in question) and the United States; a permit is emphatically not a contract, and is not to be interpreted as one. Defendants' contract arguments based on "mutual assent", Defs.' Mem., p. 12, "good faith efforts", id. at 14, bargain and intent of parties, id. at 15, 18, "the four-corners test", id. at 19, and "substantial compliance," id. at 22, are unavailing.

1. A Permit Is Not A Contract.

Under New York law, a permit is not a contract and is not to be interpreted as one. "A permit is not a contract." City of Rochester v. Olcott, 173 Misc. 87, 16 N.Y.S.2d 256, 259 (Rochester City Ct. 1939)(citing People ex rel. Lodes v. Dep't of Health, 189 N.Y. 187 (1907)). "They have neither the qualities of a contract nor of property, but are merely temporary permits to do what otherwise would be an offense against a general law." Lodes 189 N.Y. at 192; see also Hartford Accident & Indem. Co., v. Moraldo, 84 Misc. 1082, 375 N.Y.S.2d 973, 976 (Dist. Ct. Suffolk Co. 1975). Defendants' attempt to equate their permit to a contract is contrary to applicable New York authority.

Federal courts have also uniformly held that permits, including permits issued under the Clean Water Act, are not contracts. See Shell Oil, 840 F. Supp. at 716 (stating "An NPDES permit is not a contract . . ."); United States v. City of Hoboken, 675 F. Supp. 189 (D.N.J. 1987) (rejecting the defendant's contention that an NPDES permit is a contract); see also American Lung Ass'n of N.J. v. Thomas H. Kean, 670 F. Supp. 1285, 1291 (D.N.J. 1987), aff'd, 871 F.2d 319 (3d Cir. 1989) (Clean Air Act permit).

These courts have also explicitly rejected arguments, like those Defendants here make, that a permit should be interpreted according to contract principles. A permit is not a contract, but a legally enforceable rule issued by a regulatory agency, it is akin to any agency regulation or rule which a court would normally interpret. Shell Oil, 840 F. Supp. at 716.

In the Shell Oil case, Shell argued, as Defendants here do, that its permit imposed a contractual "performance - based" standard, while the plaintiff (the "Water Board") contended that defendant's mere exceedance of the numeric standard of the permit constituted a violation. Id. at 715, 718. The court rejected Shell's contract argument, reasoning that since a permit is not a contract, but "akin" to any agency rule or regulation, it would use the traditional rules of statutory construction, not contract law. Id. at 716. Thus, it held the defendants to a strict compliance standard and found them in violation of their permit. Id.

Like the defendant in Shell Oil, Defendants here argue that the "Court should at least find that DEP is in substantial compliance with the permit." Defs.' Mem., p. 22. As in the Shell Oil case, this argument is inapplicable because the rule of substantial performance applies only to contracts and permits are not contracts.

A federal court has similarly rejected Defendants' "mutual assent" interpretation argument, Defs.' Mem. at 12, in

City of Hoboken, 675 F. Supp. at 195. The City of Hoboken court addressed the issue of whether mutual assent was required for a permit, assuming, arguendo that the permit language was unclear. Id. The court explicitly rejected the defendant's argument that its National Pollutant Discharge Elimination System ("NPDES") permit was a contract between the Environmental Protection Agency (EPA) and the permittee. Id. The court went on to note that "a search for shared intentions [is] largely inappropriate in interpreting" a permit in "a pollution by permit case." Id. at 196 (citing American Lung Ass'n, 670 F. Supp. at 1289-91. Thus, the court wholly rejected the defendants' argument that its intentions be manifested in the permit. City of Hoboken at 196. Using the tools of statutory construction, the court found instead the interpretation of the EPA to govern and granted the Unites States' motion for summary judgment in full. Id.

A search for shared intentions is largely inappropriate in interpreting permits because they are regulations or rules issued by a state or federal agency. Logically, the rules of contract law are not used to interpret them. Traditional rules of statutory construction apply to permits. American Lung Ass'n, 871 F.2d at 319; Shell Oil, 840 F. Supp. at 716; City of Hoboken, 675 F. Supp. at 195-96; Public Interest Research Group of New Jersey, Inc. v. Yates, 790 F. Supp. 511, 514 (D.N.J. 1991).

As with any statute or regulation, the starting point for interpretation is the language of the permit. Defendants' permit provides: "The permittee shall maintain minimum staffing positions committed to implementation of the Industrial Pretreatment Program at 72 staff members and make good faith efforts to keep such positions filled at all times." DEP Permit no. NY-0026131, McIntosh Aff. Ex. A. This language explicitly requires that Defendants arrange to have a 72 member staff, not a 63 member staff working overtime. The permit speaks of "staff members," not "staff member equivalents" as Defendants would gloss it. And the permit requires good faith efforts to keep the staff member positions filled with staff members "at all times," not just in times of budget surpluses or overtime shortages.

In applying the rules of permit construction, courts generally defer to the permit drafting agency's interpretation. Shell Oil, 840 F. Supp. at 716. The DEC Administrative Law Judge, in approving this compromise language in Defendants' permit, stipulated on the public judicial record that "[T]he proposed conditions require the City to maintain a minimum of 72 staffing positions for the pretreatment program despite budget problems." Interim Hearing Report at 6, McIntosh Aff. Ex. C.

Defendants ignore this clear order when they suggest that the IPP staffing provision was written specifically to account for "certain hiring constraints" that a government employer works under, such as budgetary constraints and hiring freezes. Defs.' Mem., p. 17.

The Adminsitrative Law Judge's interpretation of DEC's permit writing authority is consistent with the provision's plain language -- 72 actual full time staff members are required despite "certain hiring restraints" caused by the City's "budget problems." See City of Hoboken, 675 F. Supp. at 195-96; Shell Oil, 840 F. Supp. at 717. The U.S. Environmental Protection Agency (EPA) has also indicated its position that overtime equivalents cannot be used to achieve permit compliance. In its June 29, 1994 audit of the Industrial Pretreatment Program, the EPA cited numerous deficiencies in New York City's implementation of its Industrial Pretreatment Program, including the Defendants' reliance on overtime measures to meet their permit obligations. In approving the permit, the EPA stated that "the city must make every effort to maintain the staffing level as required by the IPP and the City's SPDES permits. The City can not rely indefinitely on the use of overtime and other measures to implement the IPP and comply with the approved IPP and SPDES requirements." Letter of Patrick M. Durack of the EPA to Philip Grande of the DEP dated Feb. 3, 1995, Ex. B to McIntosh Aff. In a letter from the United States Environmental Protection Agency to the Chief of the Industrial Pretreatment Program (then called the Industrial Waste Control Section) retroactively approving the permit modification, the EPA asserted that "[m]aintaining 72 positions in the Industrial Waste Control Section (IWCS) is necessary to ensure that the IPP is adequately implemented." Letter from Patrick Durack of EPA to Larry Klein June 18, 1992, McIntosh Aff, Ex. O.

The CWA makes unlawful the discharge of any pollutants into the nation's navigable waters except as authorized by a permit issued under the Act. CWA § 301(a); 33 U.S.C. § 1311(a). Section 402 of the CWA provides for the issuance of permits for the discharge of any pollutant upon the condition that such discharge meets applicable CWA requirements. CWA § 402, 33 U.S.C. § 1342. See CWA § 301(a), 33 U.S.C. § 1311(a); see generally Student Public Interest Research Group of New Jersey, Inc. v. P.D. Oil & Chemical Storage, Inc., 627 F. Supp. 1074, 1078-1079 (D.N.J. 1986). The enforcement language in § 309 of the CWA makes a person liable for a "violation of any condition or limitation . . . in a permit issued by a State. CWA § 309(a), 33 U.S.C. § 1319(a)(1). Thus, Defendants' discharge of enormous amounts of pollutants from its 14 sewage treatment plants is legal only so long as it is in strict compliance with its permit.

Courts interpreting the Clean Water Act have noted that the Act requires "strict compliance with conditions specified in the permit." EPA v. Green, 921 F.2d 1394, 1398 (8th Cir. 1990) (emphasis added); accord, NRDC v. Texaco Refining and Marketing, 2 F.3d 493, 504 (3d Cir. 1993); Hercules, supra, 50 F.3d. at 1242. Nevertheless, relying on contract decisions instead of Clean Water Act decisions, Defendants argue that "substantial compliance" with their permit should suffice. Defs.' Mem. at 22-23. This argument is contrary to all Clean Water Act authority, which requires strict permit compliance, not substantial compliance. Congress did not insert "partial compliance" or "substantial compliance" language within provisions of the Clean Water Act. This type of language would defeat the intentions of the drafters because it would provide polluters with the opportunity to selectively enforce their own permits. The only allowance that Congress made is for the mitigation of penalties, after liability has been determined. CWA § 309(g)(3), 33 U.S.C. § 1319(g)(3).

Similarly, Defendants' suggestion that Plaintiff must identify a specific environmental harm or pollutant flowing directly from Defendants' permit violation has been rejected by the Courts: "Under the statutory scheme set up by Congress, it is not the Court's role to determine whether defendant is polluting the [waterbody], rather the court's role is to determine whether the [Clean Water Act], specifically 33 U.S.C. § 1342(k) and § 1344(p), has been violated." P.D. Oil, 627 F. Supp. at 1083; see Public Interest Resreach Group v. Powell-Duffryn Terminals, Inc., 913 F.2d 64, 73 n.10 (3d Cir. 1990)(noting that to require strict proof of causation of a particular harm by a permit violation for standing purposes would negate the strict liability scheme of the Clean Water Act), cert. denied, 498 U.S. 1109, 112 L. Ed. 2d 1100, 111 S. Ct. 1018 (1991). See also, Atlantic States Legal Foundation, Inc. v. Karg Brothers., Inc., 841 F. Supp. 51, 55 (N.D.N.Y. 1993)(holding that a violation of an industrial pretreatment requirement is an enforceable violation of the Clean Water Act although the violation did not cause a pollutant discharge in excess of permit limits).

The Clean Water Act standard is strict compliance with permit requirements, not substantial compliance. Defendants' attempt to excuse their permit non-compliance on the grounds of "substantial performance" fails as a matter of law. Defendants must comply with their permit requirement that it maintain staffing levels in the Industrial Pretreatment Program "at 72 staff members" -- not the "substantial equivalent" of 72 staff members.

Summary judgment will not be granted to a moving party who fails to adduce facts sufficient to establish the existence of any element essential to that party's case, for which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). The court must draw all inferences in favor of the nonmoving party, and, if there is a genuine issue of material fact, the movant is not entitled to judgment. See Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir), cert. dismissed, 483 U.S. 1052, 97 L. Ed. 2d 815, 108 S. Ct. 26 (1987). The moving party bears the initial burden of identifying admissible evidence which demonstrates the absence of a genuine issue of material fact. Celotex, 477 U.S. at 2553. Even under their legal theory of the case, Defendants have failed to adduce sufficient evidence to support summary judgment on one issue on which they bear the burden of proof (the amount of overtime), and their evidence is disputed on another issue (good faith efforts to hire).

Even if "substantial performance" by way of overtime sufficed to satisfy Defendants' permit requirement, which it does not, Defendants fail to meet their burden of showing the absence of a genuine issue of fact concerning the amount of overtime expended in the Industrial Pretreatment Program. Defendants do not introduce any competent evidence to show they maintained the overtime equivalent of 72 positions.

The Defendants try to dispose of this dispute by making a conclusary assertion about the amount of overtime actually worked by IPP employees. See Affidavit of Philip J. Grande, P.E. sworn to on November 16, 1995 ("Grande Aff.") ¶¶ 26-28. Mr. Grande makes the hearsay assertion that based on a chart compiled from unspecified records by unnamed "staff" members, IPP employees worked a total of 31,572 hours between July, 1993 and October, 1995. Id. at ¶ 28. For this assertion to be admissible as a summary of voluminous records under Fed. R. Evid. 409, at a minimum the records relied upon must be identified and produced, and the summary must be authenticated by the person who prepared it, not by their boss. As the Defendants have failed to produce any admissible evidence of the amount of overtime claimed, their summary judgment motion fails as a factual matter even if their legal theory had merit.

Defendants also claim, as they must, that they made good faith, albeit unsuccessful, efforts to keep the 72 staff positions in the Industrial Pretreatment Program filled at all times. This claim is also the subject of a genuine dispute. Defendants assert that posting job vacancy notices, advertising in certain papers, using other program staff members to perform IPP functions, etc., illustrate good faith efforts. Defs.' Mem., p. 18. Defendants' lack of good faith is demonstrated, however, by Defendants' refusal to hire qualified applicants at times of deficiencies in the 72 staff member requirement. At least 64 applications for employment were submitted to the IPP from July 29, 1991 to June 1995. None of these qualified candidates were hired. See 64 applicant resumes, Ex. J to McIntosh Aff. Moreover, at least one applicant who Defendants' themselves acknowledge was qualified was not hired, solely because of "budgetary constraints" and a "hiring freeze" -- voluntary constraints self imposed by the City of New York. See Letter of Marilyn Gelber to Marla Weider dated May 6, 1994, Affidavit of Marla Weider sworn to on November 15, 1995, Ex. R; Deposition of Philip Grande at 204, lines 14-21, McIntosh Aff. Ex. K; Memorandum of Robert LaGrotta to Elizabeth Simmons dated March 2, 1994, McIntosh Aff. Ex. M. Defendants' self-serving assertions that they made good faith efforts to keep 72 staff positions filled at all times is insufficient to overcome their burden as a moving party on a summary judgment motion, particularly in light of this contrary evidence.

Defendants thus fail to produce sufficient evidence to support their motion for summary judgment. The Defendants failed to meet their summary judgment burden because they did not demonstrate an absence of genuine dispute as to 1) whether sufficient overtime hours were in fact expended to make up the staffing in the IPP, and 2) as to whether they made good faith efforts to maintain a staff of 72 members. Thus, Defendants' summary judgment motion should be denied.

Defendants' summary judgment motion fails both legally and factually. Legally, Defendants' Clean Water Act permit must be strictly complied with, not merely "substantially" complied with, precluding Defendants' claimed reliance on overtime to meet its 72 member staffing requirement in the Industrial Pretreatment Program. Factually, Defendants produce no competent evidence that the overtime actually worked within the Industrial Pretreatment Program actually made up for the deficiency in full time staff, and Defendants' pious assertions of good faith efforts to hire additional staff are belied by their admitted refusal to hire qualified, willing applicants for positions in the Industrial Pretreatment Program at a time of deficiency. Defendants' summary judgment motion should therefore be denied.

Dated: White Plains, New York

May 7, 1996