August 11, 2022

When Is An Enforcement Action Not An Enforcement Action?

Posted on August 11, 2022 by Tommy Lavender

Well, when the Fourth Circuit says a state enforcement action is not enough, it should be cause for concern. In the Naturaland Trust v. Dakota Finance LLC decision from the Fourth Circuit, the Court concluded in a split decision that a South Carolina enforcement action was insufficient to preclude a citizens suit commenced pursuant to Clean Water Act § 505(a)(1), notwithstanding the provisions of Clean Water Act § 309(g)(6)(A)(ii).

The case involves a property owner that initially intended to prepare its property for active farming operations with the understanding that any land disturbances would be exempt from permitting requirements as agricultural activities, and thus sought no state or local permits and did not employ any sediment or erosion control measures. The site preparation allegedly resulted in discharges of pollutants (sediment) into nearby surface water bodies. The South Carolina Department of Health and Environmental Control (“DHEC”), which has delegated state authority under the Clean Water Act (CWA), as well as local county regulators both inspected the property and determined that State discharge/sediment and erosion control permit coverage was required and directed the property owner to cease activity until a permit was obtained.

In September 2019, DHEC issued a Notice of Alleged Violation/Notice of Enforcement Conference (“NOAV/NOEC”) to the property owner. In November of the same year, the plaintiffs sent a sixty-day notice of intent to sue as required under citizen suit provisions of the CWA. After the sixty-day notice elapsed, the organizations filed a complaint in federal court seeking injunctive relief and civil penalties. A month later the property owners entered into an administrative consent order with DHEC assessing a $6,000 civil penalty and requiring the owner to obtain a permit, submit stormwater management plans, and conduct a stream assessment and any recommended remediation that followed from that assessment.

Section 309(g)(6)(A)(ii) of the CWA 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. The pivotal issue considered by the Court was whether DHEC’s NOAV/NOEC was sufficient to be qualify as “commencement” of an action, thus barring any citizen suit action for civil penalties. The district court dismissed the complaint, in part because the court concluded DHEC, by issuing the NOAV/NOEC, 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/NOEC was not enough “to commence an action that was comparable to one brought under federal law.” The majority did not view the NOAV/NOEC as sufficiently “adversarial” to commence an “action” as that term is commonly understood, characterizing the NOAV/NOEC as more akin to a demand letter before litigation commences. The majority cited several other Circuit decisions as supporting the notion that a state administrative enforcement action is not “commenced” within the meaning of the CWA unless the public has been provided notice and opportunity for judicial review.

On dissent, Judge Quattlebaum criticized the majority’s focus on the nature of the “action” and the failure to 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 uniform enforcement policy made it clear that an NOAV/NOEC is the initial step that must be taken in all administrative enforcement actions. The dissent also took issue with the majority’s characterization of the NOAV/NOEC as an invitation to an “informal, voluntary, private conference with [DHEC] to discuss allegedly unauthorized discharges.” The dissent stated that the NOAV/NOEC noted several inspections of the properties, alleged specific violations, and stated that the owners must attend an enforcement conference or risk the imposition of a unilateral order imposing monetary penalties. Far from being the “informal invitation” the majority viewed it as, the dissent clearly viewed the NOAV/NOEC as the initiation – or “commencement” – of an adversarial administrative process. The dissent further urged that states should be afforded deference and latitude 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.

The principal enforcement mechanism for federal environmental protections is through administrative enforcement by government agencies – most frequently through state regulatory agencies that have been delegated that authority by the EPA. Third parties are allowed to initiate citizens’ enforcement actions alleging continuing violations of the CWA, but only after the required notice period. This notice period is intended to allow regulators the opportunity to take appropriate action to address such violations. The Naturaland Trust opinion has the potential to undermine many state administrative enforcement policies and raises questions on the effect of § 309(g)(6)(A)(ii) on state enforcement proceedings going forward and could likely discourage enforcement resolutions. On August 3, the property owner filed a Petition for Rehearing En Banc.