Settling Clean Water Act Citizen Suits

First Circuit holds that, while the Clean Water Act bars citizen suits for penalties when the government is diligently prosecuting violations, the statutory prohibition does not apply to citizen suits for declaratory or injunctive relief only in one specific case.

Perhaps you own a construction site. You take seriously your responsibility to comply with all laws. Those laws include complying with storm water discharge requirements under the Clean Water Act. But perhaps, despite your efforts, the state regulator determines that your facility’s runoff violates the Clean Water Act. You resolve those violations through an amicable settlement. You pay a penalty and change your operations to address the violations to the regulator’s satisfaction.

But then you receive, post-settlement, a lawsuit from a local citizen group that also claims you are violating the Clean Water Act. Too late, you think. I settled those claims. Your thought rests not just on some intuitive appeal, but case law. It would seem you have a strong argument to dismiss the lawsuit.

The First Circuit, however, recently disagreed. It held that a state’s prior enforcement action for discharges of runoff containing sediment could not bar a later citizen suit that seeks injunctive relief. The decision creates the risk of duplicative and inconsistent enforcement actions, which exposes regulated entities to substantial liability and uncertainty.

Understanding the First Circuit’s decision first requires some context.

The Clean Water Act includes a citizen suit provision that creates a cause of action so that any person may sue alleged violators of the act. 33 U.S.C. § 1365. Citizen suits may typically obtain injunctive relief requiring compliance with the act, along with civil penalties and litigation costs. Legislators look favorably upon citizen suits because they are a supplemental enforcement device. It recognizes that federal and state governments may not have the resources to enforce every violation. So citizen suits may plug these enforcement gaps by deputizing private attorneys general who act on the government’s behalf.

There are limits, however. For instance, the Clean Water Act bars private suits “if the [EPA] Administrator or State has commenced and is diligently prosecuting a civil or criminal action in a court of the United States, or a State to require compliance” under the act. 33 U.S.C. § 1365(b)(1)(B). This limitation is known as “diligent prosecution” preemption. When the government has filed an enforcement action, a private citizen suit cannot follow. In other words, there is no need for any supplemental enforcement.

Statutes with citizen suit provisions like the Clean Water Act typically include “diligent prosecution” preemption language to preserve the federal and state governments’ primary authority over enforcing these laws.

“The bar on citizen suits when governmental enforcement action is under way,” the Supreme Court explained, “suggests that the citizen suit is meant to supplement rather than to supplant governmental action.” Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found., Inc., 484 U.S. 49, 60 (1987). The Supreme Court then cautioned that expanding the scope of what citizen suits the Clean Water Act allows could change the nature of citizen suits “from interstitial” or supplementary, “to potentially intrusive.” Id. at 61.

Congress drafted the Clean Water Act in 1972, and it has done little to update the law in the half-century since to address problems that have arisen through practice. Citizen suits are one such problem.

When drafting which citizen suits the act allows, Congress used inconsistent language. In one section, the act bars a citizen suit when the government “is diligently prosecuting a civil or criminal action.” Elsewhere, Congress barred “a civil penalty action” when the government is enforcing the violation administratively. 33 U.S.C. §1319(g)(6). Did Congress intend to distinguish between “civil actions” and “civil penalty actions”? The First Circuit is the latest court to find that there is a meaningful distinction between the two phrases.

In Blackstone Headwaters Coalition, Inc. v. Gallo Builders, Inc., 32 F.4th 99 (1st Cir. 2022) an environmental nonprofit organization sued a developer under the Clean Water Act. Blackstone alleged that Gallo Builders violated the act by discharging silt-laden storm water runoff to a nearby river. The discharges, Blackstone claimed, were from Gallo Builders’ “longstanding and habitual neglect of erosion and sediment control” from its construction site. Id. at 102. Blackstone further alleged that Gallo Builders violated the act by not obtaining a Construction General Permit for its storm water discharges.

What makes this fact pattern unique, however, is that Blackstone was not the first entity to allege these facts. Several years before, the Massachusetts Department of Environmental Protection issued a Unified Administrative Order for the same discharges at the same site. The Order led to a settlement between the State and Gallo Builder’s predecessor in which the owner paid civil administrative penalties and agreed to undertake remedial measures.

Though the state had diligently prosecuted the Clean Water Act violations, the First Circuit held that Blackstone could still maintain a citizen suit under the act so long as it sought declaratory or injunctive relief — and did not seek civil penalties. Blackstone. at 110. The court highlighted how the act distinguishes between preemption for “civil actions” and “civil penalty actions” that the government is “diligently prosecuting.” If a citizen suit seeks only prospective injunctive or declaratory relief, then how could that be a “civil penalty action”? The First Circuit determined that an action for only injunctive or declaratory relief could not be a “civil penalty action.” Id. Put otherwise, an action to assess a “civil penalty” is not a “civil action” that seeks an injunction. As a result, the First Circuit held that a state’s prior administrative action for civil penalties could not bar a later citizen suit.

The First Circuit is not the first court to interpret the Clean Water Act in this way. The Tenth Circuit, for instance, reached the same conclusion based on a “strict reading of the statute.” Paper, Allied-Indus., Chem. And Energy Workers Int’l Union v. Cont’l Carbon Co., 428 F.3d 1285, 1298 (10th Cir. 2005). That rigid statutory interpretation tracks how the First Circuit arrived at its own conclusion. But different approaches to statutory interpretation can result in different outcomes. And the issue presented in Blackstone and Allied-Industrial is not immune to variety. Look no further than the First Circuit, as its decision in Blackstone required that it overrule thirty-one years of its own precedent.

In 1991, the First Circuit considered North and South Rivers Watershed Association v. Town of Scituate, 949 F.2d 552 (1st Cir. 1991). The court explained that there’s “a link between civilian penalty and injunctive actions.” And the “diligent prosecution” preemption, the First Circuit had held, “extends to all citizen suits brought under” the Clean Water Act and “not merely [actions for] civil penalties.” Id. at 558. The Eighth Circuit agreed with this prior analysis and held that “diligent prosecution” preemption must prohibit citizen suits after a government’s diligent administrative enforcement. Arkansas Wildlife Fed’n v. ICI Americas, Inc., 29 F.3d 376, 383 (8th Cir. 1994).

A circuit split thus arises from this statutory ambiguity. A strict, literal reading of the Clean Water Act may seem appropriate to resolve the ambiguity. But practical problems underlie that approach. Consider again Arkansas Wildlife, in which the Eighth Circuit explained that “[a]llowing suits for declaratory and injunctive relief in federal court, despite a state’s diligent efforts at administrative enforcement, could result in undue interference with, or unnecessary duplication of, the legitimate efforts of the state agency.” Arkansas Wildlife Fed’n, 29 F.3d at 383. This “undue interference” presents significant problems as settling violations with a regulator does not mean you have resolved your liability. Another action by a crafty private citizen may be forthcoming, subjecting you to duplicative enforcement actions for the same violations.

Duplication is not the only concern. Suppose the private citizen does not agree with the remedial approaches that the regulator accepted in settling the administrative enforcement action. The citizen suit may demand that you remediate the violations in a way different from what the regulator required. Parallel enforcement thus risks not just duplication, but also risks inconsistent remedial relief.

A third concern looms large in this discussion: attorneys’ fees.

The Clean Water Act encourages private citizen suits by allowing courts to award litigation costs, including reasonable attorneys’ and expert witness fees, to any prevailing party. 33 U.S.C. § 1365(d). Even under the First Circuit’s analysis in Blackstone, a prevailing citizen suit cannot obtain civil penalties. (Its relief, again, would be limited to declaratory or injunctive relief.) But limiting payment for civil penalties does not mean that the alleged violator won’t pay for the lawsuit. If the citizen suit can prove the basic elements for a violation, then a court may award attorneys’ fees even if the injunctive relief also awarded differs just slightly from what the regulator previously required.

These litigation costs, of course, are substantial. Passing those costs onto regulated entities compounds the challenges in complying with the Clean Water Act. Is this substantial financial and planning risk—part of settling administrative enforcement actions, according to the First and Tenth Circuits—what Congress had in mind when it wrote the Clean Water Act in 1972?

Given the circuit split, the Supreme Court may resolve this question. But a possible route is for Congress to amend the fifty-year-old statute. Regulated entities deserve clarity in knowing how the law applies to them.

Meanwhile, the regulated community remains exposed to the risk of multiple enforcement actions. They can mitigate that risk by trying to avoid ongoing violations. If possible, avoid exposing storm water to industrial processes or activities that can discharge pollutants to nearby waters. Or contain runoff to avoid discharging pollutants to those same waters.

But not all facilities can achieve these goals. Given the risks associated with one or more enforcement actions, facility owners and operators should stay on top of these legal developments and consult experts if there is any doubt about whether these laws affect your operations.