Negotiating Resolution of CWA Citizen Suits and 60-Day Notice Letters: Tactical Tips and Practical Strategies
Each of the major federal environmental statutes contains a “citizen suit” provision. See 33 U.S.C. § 1365 (Clean Water Act); 42 U.S.C. § 7604 (Clean Air Act); 42 U.S.C. § 6972 (Resource Conservation & Recovery Act (RCRA)); and 42 U.S.C. § 9659 (Comprehensive Environmental Response Compensation & Liability Act (CERCLA)). As enforcement budgets and staff of state and federal environmental agencies are reduced, it is an increasingly common occurrence for manufacturing facilities, real estate developers, infrastructure projects and others to receive letters from nongovernmental entities, environmental organizations and/or an individual notifying the recipient of the letter that it will be sued under a “citizen suit” provision of a federal environmental statute as a result of alleged violations of the statute.
The most common type of citizen suit is filed under the federal Clean Water Act (CWA). This article will focus on strategies for defending against and attempting to resolve citizen suits brought under the CWA, but many of the strategies also have application to the defense of citizen suits brought under the other federal environmental statutes.
The citizen suit provision of the CWA is found in section 505 of the statute and provides in relevant part that “any citizen may commence a civil action on his own behalf against any person … who is alleged to be in violation of (A) an effluent standard or limitation under this chapter or (B) an order issued by the Administrator [of U.S. Environmental Protection Agency] or a State with respect to such a standard or limitation.” 33 U.S.C. § 1365(a)(1). The term “person” is defined in the CWA to include individuals as well as corporations, partnerships and associations. 33 U.S.C. § 1362(5).
The citizen suit provision allows nongovernmental organizations and individual plaintiffs to “step into the shoes” of the relevant regulatory agency and enforce the provisions of the CWA and permits issued under the CWA against alleged violators, and citizen suits have become particularly prevalent as budgets of state regulatory agencies have become more limited. However, the Supreme Court has recognized 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).
Although citizen suits are prevalent, trials of citizen suits remain quite rare for two primary reasons. First, § 505 of the CWA provides citizen plaintiffs with significant leverage incentivizing defendants to settle citizen suit claims. Such leverage includes (i) the ability to seek up to $55,801 per day per violation in civil penalties payable to the U.S. Treasury, as well as injunctive relief; and (ii) the ability to recover the citizen group’s attorneys’ fees and litigation expenses if the citizen group “substantially prevails” on its claims. In light of the plaintiff’s significant leverage and the potential for paying the plaintiff’s attorney’s fees, defense counsel must not only think like a litigator in preparing a defense, but also act as a client counselor in evaluating the advisability of an early settlement.
The second reason for the rarity of trials is that § 505 of the CWA, and the case law interpreting and applying it, set forth a number of defenses and procedural hurdles that can, at times, provide a basis for defendants to obtain dismissal or summary adjudication of citizen suit claims. Such defenses will be discussed further below.
The Pre-Lawsuit Written Notice Requirement
Section 505(b) of the CWA mandates that no citizen suit may be commenced until the plaintiff has given notice of the alleged violation and waited 60 days prior to filing suit. 40 C.F.R. § 135 sets forth specific requirements that a citizen group must satisfy with its 60-day notice letter including the required contents of the letter and to whom the letter must be sent. The required recipients must include (i) the owner or managing agent of the alleged violator; (ii) the registered agent for the corporation in the state in which the violation is alleged to have occurred (if the alleged violator is a corporation); (iii) the administrator of the U.S. EPA; (iv) the regional administrator for the EPA region in which the violation is alleged to have occurred; and (iv) an authorized representative of the state agency with responsibility for water pollution control.
The notice letter must also include, among other things, the identity of the counsel representing the person giving notice, and, most importantly, contain sufficient information to allow the alleged violator to identify:
(1) the specific standard, limitation or order alleged to have been violated;
(2) the activity alleged to constitute a violation;
(3) the person(s) responsible for the alleged violation;
(4) the location of the alleged violation;
(5) the date(s) of such violation; and
(6) the full name, address and telephone number of the person giving notice.
40 C.F.R. § 135.
Lawsuits based upon notice letters that fail to sufficiently provide the requisite information are subject to dismissal. See e.g., Hallstrom v. Tillamook County, 493 U.S. 20, 31 (1989) (failure to comply with 60-day notice and delay requires dismissal of RCRA citizen suit because such requirements are “mandatory conditions precedent to commencing suit.”).
Upon receipt of a 60-day notice, it is very important for defense counsel to carefully evaluate whether the prospective plaintiff has satisfied the requirements for the notice letter, and, if not, seek an early dismissal of a subsequent lawsuit based upon a deficient notice. Court decisions are quite fact-specific in regard to whether a particular notice letter provided sufficient information. See, e.g., Atwell v. KW Plastics Recycling Div., 173 F. Supp. 2d 1213 (M.D. Ala. 2001) (plaintiffs must “provide enough information to enable both the alleged violator and the appropriate agencies to identify the pertinent aspects of the alleged violations without undertaking an extensive investigation of their own”).
The Purpose of the 60-Day Delay Period and the Resultant Defenses
The purpose of the 60-day delay period between transmittal of the notice letter and filing of a lawsuit is twofold: (i) to allow the relevant governmental agency to take action, see American Canoe Ass’n, Inc. v. City of Attalla, 363 F.3d 1085, 1087 (11th Cir. 2004) (60-day notice period “acts much like a statute of limitation by delimiting the period during which the governmental entities can control exclusively enforcement actions”); and (ii) to allow an opportunity for the alleged violator to voluntarily comply or enter into settlement negotiations with the prospective plaintiff. These purposes relate to two potential defenses: the “diligent prosecution” defense and the Gwaltney “no ongoing violation” defense.
The diligent prosecution defense is set forth in § 309(g)(6) of the CWA and provides that a citizen suit is barred if the EPA or a delegated state agency has commenced and is diligently prosecuting an administrative penalty action against the alleged violator for the same alleged violations. However, the diligent prosecution defense is frequently quite limited because the enforcement scheme of the delegated state agency must be “comparable” to the federal enforcement scheme, and, even if comparable, the citizen suit will not be barred if (i) the citizen suit complaint was filed before the administrative action, or (ii) the 60-day notice letter is sent before the administrative action and the citizen suit complaint is filed within 120 days of the notice date. 33 U.S.C. § 1319(g)(6)(B).
The Gwaltney “no ongoing violation” defense was recognized by the U.S. Supreme Court in Gwaltney v. Chesapeake Bay Foundation, and requires that a citizen plaintiff allege an ongoing CWA violation at the time of filing its lawsuit – i.e., the plaintiff cannot bring a citizen suit for wholly past violations. Therefore, the 60-day notice and delay period provides a valuable opportunity for a prospective defendant to attempt to cure any alleged violations prior to a lawsuit being filed and bar the citizen suit. In evaluating compliance, defense counsel should (i) obtain all facility discharge monitoring reports and other compliance documents from the client, as well as from the relevant regulatory agency through an Open Records Act request (or through on-line databases); and (2) use a written “litigation consultant” engagement letter in retaining an environmental consultant to evaluate compliance issues to avoid creating discoverable evidence in the citizen suit.
Engaging with the Citizen Plaintiff and Potential Settlement Negotiations
During the 60-day notice period, the issue of whether to substantively engage with the citizen plaintiff frequently arises as a decision point. Typically, any such engagement will involve a request by the citizen plaintiff to conduct a site visit to the facility of the alleged violator and may include an informal request for documents such as the facility’s Storm Water Pollution Prevention Plan and best management practices logs.
In the event that circumstances warrant pre-lawsuit settlement negotiations with the citizen plaintiff, there are four typical components of any citizen suit settlement demand: (1) “compliance” by the defendant; (2) the defendant funding a supplemental environmental project (“SEP”) or “mitigation payment”; (3) the defendant “reimbursing” the citizen group for its attorneys’ fees and expenses of litigation; and (4) the defendant allowing periodic, future access to the defendant’s site for the citizen group to monitor compliance with the law and/or for the citizen group to review any on-site SEP performed by the defendant. Such request for future access and monitoring also typically involves a demand by the citizen group for the defendant to pay for the cost of the citizen group’s consultant to monitor compliance and to conduct the future site visit(s).
In preparing for or evaluating a citizen group’s settlement demand, it is frequently very helpful to conduct a PACER search for consent judgments involving the particular citizen group and/or its counsel. Many of the citizen groups and their counsel are repeat players with a significant track record of consent judgments that they have entered into with prior defendants. Those prior consent judgments can be quite helpful in educating and setting expectations of clients and also can be utilized in negotiating with the citizen group in response to their initial demand.
Once the 60-day notice period ends, citizen groups will typically file suit even during ongoing settlement negotiations. The reasons for citizen groups’ eagerness to file the lawsuit include: (i) falling within the 120-day safe harbor of § 309(g)(6)(B)(ii) to avoid a diligent prosecution defense; (ii) the 5-year statute of limitations applicable to citizen suits; and (iii) the citizen group’s desire for a court-enforced consent judgment. Once a lawsuit is filed, any proposed settlement is subject to review and approval by the EPA and the Department of Justice for a 45-day period. 33 U.S.C. § 1365(c)(3).
It is easy for a company receiving a citizen suit demand letter under the CWA or other federal environmental statue to panic or ignore the letter. However, neither of those extremes is productive. The 60-day period between receipt of the letter and when the citizen is permitted to file a lawsuit is a very important time period for the company to retain experienced environmental counsel to assist the company in fully evaluating the allegations in the letter, reviewing the company’s records, preparing for a defense of the potential lawsuit and considering options for potentially resolving the matter. If the company begins that process sooner rather than later, the company is better able to avoid unwelcome surprises in a lawsuit and hopefully to return its focus to running its business in a profitable and environmentally compliant manner.