DATE: Tuesday, September 9, 1997            TAG: 9709090245

SECTION: FRONT                   PAGE: A1   EDITION: FINAL 

SOURCE: BY TONY WHARTON, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:   57 lines

PROSECUTORS: SMITHFIELD FINE SHOULD GO TO FEDERAL GOVERNMENT MONEY SHOULD NOT BE SET ASIDE FOR BAY, PAGAN RIVER, ARGUES JUSTICE DEPARTMENT.

Pollution damage to the Pagan River may have been done locally by Smithfield Foods Inc., but federal prosecutors say a $12.6 million fine against the company must go to Washington, D.C.

In a brief filed Monday, the U.S. Department of Justice said the money should be paid into the Treasury and not set aside to clean up the Chesapeake Bay or the Pagan River.

Under the Miscellaneous Receipts Act, the brief said, there is no alternative since ``Congress retains its constitutional role in deciding how federal monies are spent.''

Environmental officials said that would be a shame.

``Given the origin of this fine and the reason it was imposed and the damage clearly done to the Pagan River, it's absolutely appropriate that it go back into repairing the damage done,'' said Chuck Epes, a spokesman for the Chesapeake Bay Foundation. ``I don't know that we'd want to see it get lost in the U.S. Treasury.''

U.S. District Judge Rebecca Beach Smith levied the fine against Smithfield Foods in August for polluting the Pagan River with hog wastes regularly since 1991. The company has said it intends to appeal.

Smith asked for recommendations on how the money should be spent, ``with a specific focus on the feasibility of directing all, or part of, the penalty toward the restoration of the Chesapeake Bay and its tributaries, namely the James and the Pagan Rivers.''

Last week, the town of Smithfield asked that the money be spent there, citing the environmental slogan, ``Think Globally, Act Locally.'' Town officials were not available for comment Monday afternoon.

The brief filed Monday by Assistant Attorney General Lois J. Schiffer rejected that argument, even pointing to a case involving some of the same parties to show why.

A U.S. Supreme Court ruling in a civil suit, Gwaltney of Smithfield Ltd. versus the Chesapeake Bay Foundation, noted that court-ordered fines are ``payable to the United States Treasury.''

Other appellate courts, Schiffer's brief said, have decided that Congress, not the federal court, is the best place to decide environmental policy and make appropriations.

The brief quoted a federal judge who said, ``A district court is not equipped to determine the best way to attack pollution problems in a given area.''

However, the brief also acknowledged that judges in Florida, Kentucky and California have indeed required that fines go to environmental projects, over the objection of the Justice Department.

Epes said, ``It's our understanding that it's the call of the judge.''

The foundation has suggested that the money go into the newly created Virginia Water Quality Improvement Fund. Epes noted that $12.6 million would almost double the size of that fund. Even then, Epes said, ``That would literally be a drop in the bucket.''

The costs of environmental restoration in the entire Chesapeake Bay, he said, easily reach into the hundreds of millions of dollars.

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