On Wednesday, the Fourth Circuit issued a decision reversing the district court and allowing private plaintiffs to pursue a suit under the Clean Water Act (CWA) against alleged polluters, seeking civil penalties under Section 1365 of the CWA.
Prior to the action, South Carolina’s environmental regulators had sent a “Notice of Alleged Violation/Notice of Enforcement Conference” to the alleged polluters regarding the claimed violations, the opinion explained. The CWA “…contains a provision stating that a violation of its requirements ‘shall not be the subject of a civil penalty action under …Section 1365’ if a State ‘has commenced and is diligently prosecuting an action under a State law comparable to’ the federal law assessing civil penalties.” The court below had held that the notice from the South Carolina regulators constituted such an action, which accordingly barred the federal civil suit.
The plaintiff-appellants are Naturaland Trust and South Carolina Trout Unlimited (collectively, Plaintiffs). The defendant-appellees are Dakota Finance LLC, d/b/a Arabella Farm; Ken Smith, Sharon Smith; and Willard R. Lamneck, Jr. (Collectively, Defendants). Plaintiffs are conservation groups. The opinion refers to the Defendants collectively as Arabella Farm, which defendants created to operate as a “farm with an orchard and vineyard and later on an event barn for weddings and other celebrations.”
In 2017 Defendants began clearing land “to create its venue.” Defendants sought no permits and did not “install sediment or stormwater control measures, which allegedly resulted in significant discharges of sediment-laden stormwater onto nearby property and caused widespread erosion and other detrimental impacts.”
This activity “eventually caught the attention of government regulators,” leading to South Carolina’s Department of Health and Environmental Control’s (the South Carolina Environmental Department) written demand in August 2019 the Defendants obtain a National Pollutant Discharge Elimination System (NPDES) permit and cease and desist all activity except the installation of certain pollution control measures. In September 2019, the South Carolina Environmental Department sent the “Notice of Alleged Violation” referred to above, “and informed the farm of a voluntary ‘informal’ enforcement conference scheduled for the end of that month.”
In November 2019, Plaintiff Naturaland Trust and Trout Unlimited sent Defendants an “intent to sue letter” required under the CWA.[3] After a statutorily required 60 day waiting period, Plaintiffs sued, seeking injunctive relief and “civil penalties to be paid to the United States Treasury.”
A month after the Plaintiffs sued, the South Carolina Environmental Department and Defendants “entered into a consent order.” That order required Defendants to pay a $6,000 penalty, “obtain an NPDES permit, submit a stormwater plan and site remediation plan, and conduct a stream assessment and any recommended remediation.”
“The main question here,” the Fourth Circuit states, “ is whether a state agency’s notice of an alleged violation for failure to obtain a required permit, without more, ‘commence[s] an action” within the meaning of [the CWA provision prohibiting private actions for penalties after a state has sued].” Because we conclude it does not, we reverse the district court’s judgement and remand for further proceedings.
The Fourth Circuit reasoning is based primarily on its view that the South Carolina Environmental Department’s Notice of Alleged Violation did not constitute an “action,” I.e., “an adversarial proceeding initiated by a formal public document …” The Fourth Circuit observes,“On the facts of this case, we do not think the Department’s notice of alleged violation was enough to commence an action that was comparable to one brought under federal law. That notice invited Arabella Farm to an informal, voluntary private conference with the Department to discuss allegedly unauthorized discharges. The notice mentioned no penalties or sanctions that would flow specifically from the failure to attend the conference.”
The appeal was decided by a three judge panel: Judges Diana Motz and Toby Heytens supported the opinion, while Judge A. Marvin Quattlebaum dissented.
