ELR Citation: ELR 20416
No(s). 01-1380 (7th Cir. Jan 18, 2002)

The court affirms a district court decision ordering a corporate farm to pay penalties it stipulated to in a consent decree it entered into with the U.S. Environmental Protection Agency (EPA) for the restoration of wetlands destroyed by the farm's construction of a drainage ditch system without a Clean Water Act permit. The farm invoked the decree's dispute resolution clause and sought to modify the consent decree. The district court did not find adequate grounds for modification and imposed penalties against the farm. The court first holds that the stipulated penalty provision in the consent decree is not void as a matter of public policy because it allows for penalties to accrue while the parties engage in the dispute resolution process. Although the farm offers precedent allegedly supporting its claim that the dispute resolution provision is against public policy because it inhibits its right of access to the courts, that precedent does not control and is notably distinguishable from the present case in that the parties in those cases fully remedied the environmental harm, and the accrued penalties at issue were unrelated to continuing environmental violations. In fact, controlling precedent requires imposition of the penalties against the farm. Moreover, the farm cannot now escape the consequences of the consent decree with a public policy argument. The stipulated penalty accrual provision does not apply to a successful dispute resolution claim. Unfortunately for the farm, its claim was unsuccessful, but to excuse it from the stipulated penalties would undermine the consent decree and provide any party to a consent decree a method of delaying performance. In addition, the court holds that the farm cannot claim that the stipulated penalties were unreasonable since the delay in completion of the work was due to weather conditions beyond its control. The consent decree included a force majeure provision allowing delay due to weather, but the provision required the farm to provide EPA with written notice of such delay. No notice was provided, and the farm cannot now claim that compliance with the schedule was not possible due to the weather.

Counsel for Plaintiff
Sean Donahue
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Daniel J. Collins
Williams, Collins & Bax
20 N. Wacker Dr., Ste. 3230, Chicago IL 60606
(312) 372-3311

Bauer, J. Before Coffey and Wood, JJ.