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U.S. v. Smithfield Foods Inc. (E.D. Va.)
A view of the Blue Ridge Mountains as seen from Skyland drive.  Courtesy of Jeff Bank (DOJ/ENRD/EO)

History

In 1996, Smithfield Foods, Inc. was the largest employer in the town of Smithfield, Virginia and an important economic actor throughout the state. For many years, it had been discharging wastewater from its two pork-packing plants that violated state water quality standards. Over 7000 days the company discharged wastewater containing significantly more than the permitted amount of phosphorous, impairing the Pagan River and contributing to the pollution of the Chesapeake Bay. Instead of taking enforcement action, Virginia entered into a series of agreements giving the company multiple extensions to connect its wastewater to the local treatment plant.

EPA also discovered that the company had been submitting false reports to the United States. The Clean Water Act requires companies that discharge to the nation’s waters to report, under penalty of perjury, the contents of their wastewater. Smithfield’s wastewater treatment plant operator admitted submitting dozens of false reports on behalf of the company.

Enforcement Action

In October 1996, the United States told the company it intended to bring an enforcement action, seeking penalties and compliance with the Clean Water Act. In early settlement talks, the company rejected an offer to settle EPA’s claims for $3.5 million.

When a settlement was not forthcoming, the Environmental Enforcement Section filed suit in November 1996. During a press conference held at company headquarters on December 17, 1996, the company’s CEO alleged that the enforcement action was politically motivated and vowed to fight to the bitter end. He also bought a full page advertisement in the Washington Post containing an “open letter” berating EPA for its lawsuit.

In mid-1997, EES asked the Court to rule on whether the Company could be held liable despite its claim that its violations were excused by agreements with Virginia. At oral argument, then attorney, now Chief Justice of the United States Supreme Court John G. Roberts argued on behalf of Smithfield that the company had in essence gotten permission from Virginia to violate its permit and that it could not be held responsible for its massive violations of the law. The Court rejected the argument, entering a ruling that Smithfield was liable both for the massive phosphorus violations and for the false reports its employee had submitted. 965 F. Supp. 769 (E.D. Va. 1997)

At trial, the Court had to decide what penalty should be imposed for Smithfield’s past violations.

Outcome:

  • The Court imposed a record-setting penalty of $12.6 million. Smithfield appealed, but in the end was ordered to pay a penalty three times the amount it could have paid in a pre-filing settlement. 972. F. Supp. 338 (E.D. Va. 1997).

  • Through this lawsuit, the Department of Justice was able to establish the importance of timely compliance with the Clean Water Act and the cost to those who fail to comply. Years later, the Pagan River is cleaner because Smithfield is no longer discharging into it.

  • The penalty still stands as the largest penalty imposed after trial for violations of a Clean Water Act permit – a warning to all those who seek to avoid their obligation to help make our waters fishable, swimmable, and drinkable.
 

Last Updated: November 2010