First Circuit Court of Appeals Limits the Diligent Prosecution Bar to Clean Water Act Citizen Suits

The Clean Water Act, like many environmental laws, provides a supplementary enforcement mechanism, allowing citizens to sue any person who is alleged to be in violation of an effluent standard or limitation under the Clean Water Act. Under section 1365(a)(i), the citizen plaintiff may seek civil penalties, injunctive and declaratory relief, as well as recover related attorneys’ fees. However, a citizen suit is barred where EPA or the State (under a comparable regulatory provision) has commenced and is diligently prosecuting an enforcement action for the same violations. This is referred to as the “diligent prosecution” defense and is generally believed to protect a person from a citizen suit action for penalties, declaratory and injunctive relief if an activity has been or is being addressed by a federal or state enforcement action. The protection against citizen suits often is one of the considerations supporting settlement of an administrative enforcement action. However, a recent en banc decision of the First Circuit Court of Appeals has called into question this basis for settling state administrative actions, finding that diligent prosecution only protects a settling party from a citizen suit seeking penalties – not a citizen suit seeking injunctive relief, as well as related attorney fees. See Blackstone Headwaters Coalition, Inc. v. Gallo Builders, Inc., et al., No. 19-2095 (April 18, 2022). As the costs of injunctive relief can sometimes be magnitudes of order greater than a potential penalty, a party to an administrative settlement with a State or EPA may continue to be at risk of CWA citizen suits for the same activity addressed by an enforcement order. 

In Blackstone, the Massachusetts Department of Environmental Protection (MassDEP) brought a Massachusetts Clean Water Act enforcement action against a developer for erosion and sedimentation-related claims associated with construction activities at a large residential development. MassDEP and the developer entered into an administrative Consent Order that required the developer to pay a civil penalty, perform injunctive relief and be subject to stipulated penalties and additional enforcement action if the discharges continued. Three years later, Blackstone Headwaters Coalition (BHC) brought a CWA citizen suit in federal district court seeking civil penalties and injunctive relief for the same alleged violations that were addressed in the Consent Order. 

The developer moved for summary judgment on the grounds that BHC’s citizen suit is barred under § 1319(g)(6)(A) “diligent prosecution” defense as the developer was already subject to an administrative enforcement action under a State law analogous to the CWA. BHC claimed that its citizen suit was not barred as Section 1319(g)(6)(A) only bars citizen suits to the extent that the such suit is seeking civil penalties – it does not bar a suit for injunctive relief. The district court granted summary judgment in favor of the developer, holding that a CWA citizen suit is barred regardless of whether the citizen is seeking injunctive relief or civil penalties. In rejecting BHC’s claims and granting summary judgment for the developer, the court relied on a decades-old First Circuit precedent of North and South Rivers Watershed Association, Inc. v. Town of Scituate, which held that a citizen suit seeking equitable relief is barred when the state is diligently prosecuting an administrative enforcement action to avoid duplicative actions and to promote the purpose of citizen suits to supplement, rather than supplant, government action. Summary judgment was affirmed by a panel of the First Circuit on the same grounds.  

On full en banc review, the First Circuit overturned Scituate and found that a citizen suit is barred by the State’s administrative order only to the extent that it seeks penalties for the same ongoing violations and that an action may proceed for declaratory or injunctive relief. The Court focused on the language of Section 1319, which authorizes administrative penalties by EPA and the State outside of judicial proceedings and, in particular, Section 1319(g)(6)(A), which outlines the effect of administrative orders on EPA’s enforcement authority:

(6) Effect of Order

(A)  Limitation on Other Actions

Action taken by the Administrator or the Secretary, as the case may be, under this subsection shall not affect or limit the Administrator’s or Secretary’s authority to enforce any provision of this chapter; except that any violation …

(ii)  with respect to which a State has commenced and is diligently prosecuting an action under a State law comparable to this subsection, …

shall not be the subject of a civil penalty action under subsection (d) of this section or section 1321(b) of this title or section 1365 of this title.

The First Circuit en banc panel rejected the holding of Scituate and thirty years of precedent in the First Circuit. Rather, the Blackstone court took a deep dive into legislative history and prior court cases, finding support for its narrow reading for state administrative enforcement actions and issuing a broad ruling overturning Scituate. As a result, in the First Circuit, a citizen is not barred from bringing a citizen suit for injunctive relief even if there is a concurrent and ongoing state administrative enforcement action addressing the same violations.

Some things to note from the Court’s decision:

  • In some ways, this is a narrow decision, applicable to State administrative actions. The Court indicated that it would reach a different conclusion if the matter had been brought in “court” vs. administratively and thus bar a citizen suit for both civil penalties and equitable relief. The Court did not explicitly rule on whether they would reach the same conclusion with regard to EPA administrative actions.
  • The Court asked EPA to file a “friends of the court” brief regarding EPA’s position on Section 1319(g)(6)(A). EPA agreed with the Court that a state administrative action only bars citizen suits for civil penalties. Notably, EPA went a step further and said this conclusion holds true for both state and EPA administrative actions. A citizen suit would only be fully barred when EPA or the State is undertaking a judicial enforcement proceeding.
  • There is now a split in Circuits. The 8th Circuit takes a broad, expansive view, finding that citizen suits seeking injunctive relief are barred by a State administrative enforcement action whereas the 10th Circuit agrees with the 1st Circuit in Blackstone, while other circuits have not ruled on this issue. This may lead to a Supreme Court decision at some point in the future. Although the Supreme Court is difficult to predict, it is possible that a conservative court will not agree with EPA and the 1st and 10th Circuits, finding that a defendant should not be subject to duplicate and overlapping enforcement actions. In any event, as most of the Circuits have not explicitly addressed this issue, a party should proceed carefully and with eyes wide open when negotiating administrative orders with EPA or State regulatory agencies.
  • There is always something disconcerting when long-standing precedent is overruled. The developer in Blackstone, in fact, asked the Court to not punish the developers for not having the “extraordinary prescience” to know that the Court would overrule the thirty year precedent. However, the Court did not agree that the ruling should apply prospectively. Rather, the developer is subject to the citizen suit’s request for injunctive relief and will be required to pay BHC’s attorney fees, which are likely to be significant.
  • This decision may influence common assumptions that an agreed administrative order is preferable to a court action. Although administrative settlements often provide more room for negotiation and creative solutions, the absence of the protection from duplicative citizen suits and lack of finality may compel a different conclusion. It should also be noted that citizen plaintiffs are often allowed to intervene in any court action.
  • Defenses to a citizen suit action are still available such as standing and res judicata; however, this does not avoid the expense of defending a citizen suit action.
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