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Fourth Circuit Decision Casts Doubt on Protection from Citizen Suits

Michael Smoak Traynham and Karen A Crawford

Fourth Circuit Decision Casts Doubt on Protection from Citizen Suits
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A frequently noted adage in cases involving environmental citizen suits is that such actions are meant to “supplement, rather than supplant” governmental enforcement action. The dissent in the recently filed Naturaland Trust v. Dakota Finance LLC decision out of the Fourth Circuit questions whether that hierarchy remains, at least with respect to citizen suits brought under the Clean Water Act (CWA), which similar to other citizen-suit provisions provides that a violation shall not “be the subject of a civil penalty action under [the citizen suit provision]” if a state regulator “has commenced and is diligently prosecuting an action under a State law comparable to” the federal civil-penalty process. This decision deepens the split between circuits on several underlying issues.

The defendants in Naturaland Trust were property owners (d/b/a Arabella Farm) who failed to obtain state and local National Pollutant Discharge Elimination System permits for construction activity and stormwater control before beginning construction activities. The South Carolina Department of Health and Environmental Control (DHEC) and local county regulators both inspected the property and determined that CWA permits were required for the activities on the property, and the property owners were directed to cease activity until permits were obtained.

In September 2019, the DHEC issued a notice of alleged violation/notice of enforcement conference (NOAV) to Arabella Farm. In November of the same year, Naturaland Trust and Trout Unlimited both sent a sixty-day notice of intent to sue as required under CWA’s citizen suit provisions. After the notice period elapsed, the organizations filed a complaint in federal court seeking injunctive relief and civil penalties. A month later, Arabella Farm entered into an administrative consent order (ACO) with the DHEC that imposed civil penalties and required Arabella Farm to obtain a permit, submit stormwater-management plans, and conduct a stream assessment and any recommended remediation that followed from that assessment.

The district court dismissed the complaint, in part because the court concluded that the DHEC, by issuing the NOAV, had commenced and was diligently prosecuting an administrative action for the same violations at the time the complaint was filed. On appeal, the Fourth Circuit reversed in a split decision.

The majority determined that the NOAV was not enough “to commence an action that was comparable to one brought under federal law. The majority did not view the NOAV as sufficiently “adversarial” to commence an “action” as that term is commonly understood, characterizing the NOAV as more akin to a pre-litigation demand letter. The majority also cited several sister-circuit decisions that it viewed as supporting the proposition that a state enforcement action is not “commenced” within the meaning of the CWA until the rights of members of the public, to both notice and judicial review, have attached.

The dissenting judge criticized the majority’s focus on the nature of the “action” and the failure to even address the commonly understood meaning of “commence.” In his view, “commencement,” as that term is commonly understood is the “start” of an action, and the DHEC policy makes clear that an NOAV is the initial step in the enforcement process. The dissent also took issue with the majority’s characterization of the NOAV as an invitation to an “informal, voluntary, private conference with [DHEC] to discuss allegedly unauthorized discharges,” noting that the NOAV memorialized multiple field inspections, accused Arabella Farm of specific violations of environmental law, and made clear that the owners must attend an enforcement conference or risk the imposition of a unilateral order imposing monetary penalties. The dissent viewed the NOAV as the initiation—or “commencement”—of an adversarial administrative process as opposed to the “informal invitation.”

The dissent urged that states should be afforded deference in “selecting the specific mechanisms of their enforcement program” and would have upheld much of the district-court decision, remanding only the injunctive-relief claims made by plaintiffs, while commenting that those claims had a steep burden to meet so as to not be barred by the state enforcement action. The dissent also distinguished some cases that the majority relied on and concluded that South Carolina’s more robust enforcement process satisfied many issues that existed in those cases. The dissent determined that both the public-notice and participation requirements were satisfied by operation of the various public notices, appellate process, and operation of South Carolina’s Freedom of Information Act, finding them “comparable” to the public notice and participation provided in the Environmental Protection Agency procedures.

The potential for citizen-suit liability is a significant motivating factor for many regulated entities to enter into voluntary compliance agreements and orders with state regulators. The Naturaland Trust opinion calls into question the degree and timing of citizen-suit protection that parties gain through state enforcement proceedings and can be read to implicitly require public participation in the formulation of enforcement remedies—which has the potential to make bilateral enforcement resolutions less common, and consequently lengthen the time required to resolve environmental violations.