DOJ Defers to States for CWA Enforcement

The threat of EPA administrative action often drives industry to consider quick, administrative settlements with state or local environmental agencies for even the slightest environmental violations.  Unless the Biden Administration changes course, industries can now do the same to avoid federal civil actions for Clean Water Act violations, which heretofore were excluded from the exercise of enforcement discretion.

The Clean Water Act, 33 U.S.C. §§ 1251 to 1388 (CWA), authorizes the discharge of pollutants to waters of the United States (WOTUS) or publicly owned treatment works (POTW) pursuant to a federal or state permit.  Most states have obtained delegated authority to issue CWA permits in lieu of EPA.  The CWA envisions a role for EPA in delegated states when it comes to enforcement.  For the first time, a recent Department of Justice (DOJ) guidance document directs DOJ not to file a federal civil action on behalf of EPA where a state proactively seeks enforcement against a violator.

Clean Water Act

Congress reserved to the United States the lead role in enforcing water quality standards in the CWA.  EPA is granted special oversight in citizen suits, CWA § 505 (c)(d), 33 U.S.C. § 1365 (c)-(d), and the federal government retains emergency authority to sue “any person” to prevent imminent and substantial endangerment to human health and the environment, CWA § 504 (a), 33 U.S.C § 1364 (a).

On the other hand, states are the primary enforcement arm for violations of the CWA:

It is the policy of the Congress to recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution, to plan the development and use…of land and waste resources, and to consult with [EPA] in the exercise of [its] authority under this chapter.

53 U.S.C. § 1251 (b) (emphasis added). A state’s right to enforce environmental statutes like the CWA makes sense because it is constitutionally required.  Printz v. United States, 521 U.S. 898, 918-19 (1997) (quoting The Federalist by James Madison).  In fact, the CWA precludes a federal civil penalty action when a state (1) commences and is diligently prosecuting or (2) successfully pursues or is pursuing administrative action under state law “comparable” to the federal administrative penalty scheme.  CWA § 309(g), 33 U.S.C. § 1319 (g).  Strangely, however, the statutory deference to states does not apply to state civil judicial enforcement actions.  Likewise, the CWA does not explicitly prevent the federal government from pursuing a subsequent administrative action even when civil judicial enforcement is precluded by the CWA.

New DOJ Policy

Recognizing the incongruity of state action precluding a federal administrative action but not a federal judicial action for the same violations, DOJ recently adopted a revised enforcement policy.  The new policy requires DOJ to defer to states in civil judicial actions, as well as administrative actions:

Accordingly, [DOJ has] come to the conclusion that – as a matter of enforcement discretion – civil enforcement actions seeking penalties under the CWA will henceforward be strongly disfavored if a state has already initiated or concluded its own civil or administrative proceeding for penalties under an analogous state law arising from the same operative facts.

Memorandum: “Civil Enforcement Discretion in Certain Clean Water Act Matters Involving Prior State Proceedings,” Clark to Section Chiefs (July 27, 2020) (the “Policy”).

The Policy is remarkable for three reasons. First, DOJ actions are “strongly disfavored.”  This elevates the burden of proof for DOJ and gives increased opportunity to the alleged violator’s legal counsel to work with the delegated state to avoid CWA litigation.

Second, it applies where states have taken or are taking either administrative or judicial action.  This encourages industries to work with POTWs and states informally when a CWA violation occurs to work out a solution promptly and efficiently.  The company does not have to be sued by a state for the Policy to apply.

Third, state penalties need only be assessed under “analogous state law” to avoid DOJ action.  The Policy does not appear to require that the amount of penalties assessed by the state be equivalent to the amount EPA could demand under EPA penalty policies.  This may result in substantial savings if the violation is promptly settled with the state or POTW using state or local penalty policies.

Application of the Policy

For the Policy to apply, the state action must be initiated prior to a federal civil penalty action, which suggests CWA violators may wish to seek out state or POTW enforcement in complex cases right away.  Also, the Policy is not absolute, meaning there are circumstances where DOJ reserves the right not to apply it.  These circumstances are limited and include:

1. The violator would receive an “unfair windfall” if a federal action is not filed;
2.  The state is not “diligently prosecuting” the action;
3.  The state requests EPA assistance and the request “would not amount to unfair piling on”; or
4. The federal action is necessary to protect an important federal interest or there is a
   “discernible gap in the prior state relief,” or “other exceptional circumstances.”
    

Policy at pp. 8-9.  The last category carries the greatest risk of the Policy not applying since it is not clearly explained by the guidance.

Conclusion and Use of Policy

Where a company experiences a violation of CWA permit requirements, the Policy offers an opportunity to resolve non-compliance efficiently with a local POTW or state agency.  By settling early, the company limits the potential for EPA civil actions where significant fines are common.  EPA action is “strongly disfavored” under the Policy when this occurs.  Preclusion is available even if the underlying POTW or state action is merely administrative, as long as the state law is analogous to the CWA, which is likely to be the case.

To maximize use of the Policy, companies under threat of EPA enforcement for noncompliance with wastewater permits may wish to take the following measures:

Step 1: Audit wastewater permit compliance and implement corrective action where possible;           

Step 2: Evaluate the need to voluntarily disclose non-compliance to the appropriate agency, and in cases where significant non-compliance may be a risk, apply voluntary disclosure procedures; and

Step 3: Resolve the non-compliance consistent with the scope and intent of the Policy.

This approach could remove the risk of substantial enforcement by DOJ in the future for the covered violations.

With all of this said, however, the Policy may be short-lived.  The Biden Administration will undoubtably be tougher on enforcement than the Trump Administration and is unlikely to bind DOJ to policies that defer enforcement to the states.  Accordingly, the new Attorney General or the Assistant Attorney General for the Environment and Natural Resources Division may void the Policy shortly after taking office.  We will keep you apprised.

Civil Enforcement Discretion in Certain Clean Water Act Matters Involving Prior State Proceedings (DOJ July 27, 2020).