Hoffman Group, Inc. v. United States Environmental Protection Agency

No. 88 C 6695 (N.D. Ill. January 23, 1989)

The court holds that the Federal Water Pollution Control Act (FWPCA) precludes preenforcement review of compliance orders issued by the Environmental Protection Agency. The compliance order directed plaintiff to cease further discharge of fill material into wetlands and to perform restoration. Preenforcement review of compliance orders is inconsistent with the FWPCA's enforcement scheme. Recipients of compliance orders can raise their challenges in enforcement proceedings. The court notes that failure by the government to pursue enforcement expeditiously will give rise to a laches defense with regard to penalties accrued during the period of noncompliance.

Counsel for Plaintiff
Richard R. Elledge
Gould & Ratner
222 N. LaSalle St., Eighth Fl., Chicago IL 60601
(312) 236-3003

Gary H. Baise
Beveridge & Diamond
1333 New Hampshire Ave. NW, Washington DC 20036
(202) 828-0200

Counsel for Defendants
Gail Ginsberg
5806 Judiciary Center Bldg., 555 Fourth St., Washington DC 20001
(202) 272-6750

[20 ELR 20002]

Marshall, J.:

Opinion

Plaintiff brought this action challenging the Findings of Violations and Compliance Order ("Compliance Order") issued by the United States Environmental Protection Agency ("EPA") for alleged violations of the Clean Water Act ("CWA"). Plaintiff has moved this court for a preliminary injunction and defendants have countered with a motion to dismiss for lack of subject matter jurisdiction. For the reasons that follow, defendants' motion to dismiss is granted.

Our disposition requires only an abbreviated statement of facts. Plaintiff is the owner of property known as the Victoria Crossing subdivision located in the Village of Hoffman Estates, Illinois. In March of 1986, the Army Corps of Engineers ("Corps") concluded that plaintiff had discharged fill material into "wetlands" without a permit in violation of section 404 of the CWA, 33 U.S.C. § 1344. After a mitigation plan negotiated by the Corps and plaintiff was rejected by the EPA, the Corps denied plaintiff's after-the-fact permit application and the EPA issued a compliance order pursuant to section 309(a) of the CWA, 33 U.S.C. § 1319(a). The order directed plaintiff to cease further discharges and to submit and carry out a plan to restore the wetlands to their original condition.

Plaintiff brought this action in August of 1988 seeking a declaration of the order's invalidity and an injunction against its enforcement. Plaintiff's complaint alleges that the issuance of the order is unlawful because (1) it is based on impermissibly vague standards regarding what constitutes a "wetland," (2) it is based on a standard not promulgated through the statutorily required notice-and-comment rulemaking procedure, (3) it is based on an incorrect delineation of the "wetland" boundaries, and (4) certain areas within the alleged "wetland" are exempt from the permit requirements under applicable regulations.

Defendants contend that dismissal is required because the CWA precludes pre-enforcement review of compliance orders.¹ We agree.

Our authority to review the actions of federal agencies arises from section 10(a) of the Administrative Procedure Act ("APA"), 5 U.S.C. § 702. This authority, however, exists only if review is not precluded by the relevant substantive statute. 5 U.S.C. § 701(a)(1); Block v. Community Nutrition Institute, 467 U.S. 340, 345 (1984).

Preclusion of judicial review need not be stated expressly on the face of the statute. Rather, congressional intent is determinative, and an intent to preclude review of a given action may be derived from "the structure of the statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved." Block, 467 U.S. at 345. Such intent must, however, be persuasively shown. Abbott Laboratories v. Gardner, 387 U.S. 136, 140 (1967); see generally Note, Statutory Preclusion of Judicial Review Under the Administrative Procedure Act, 1976 Duke L.J. 431, 442 & n.67.

In Lloyd A. Fry Roofing Co. v. E.P.A., 554 F.2d 885 [7 ELR 20415] (8th Cir. 1977), the court considered a pre-enforcement challenge to a compliance order issued pursuant to the Clean Air Act ("CAA"). Based on the relevant legislative history and the fact that pre-enforcement review is "wholly inconsistent" with the CAA's enforcement scheme, the court concluded that judicial review was unavailable. Id. at 889-92. The plaintiff's challenges, the court noted, are appropriately considered when judicial enforcement of the compliance order is sought by the EPA. Id. at 891 (citing West Penn Power Co. v. Train, 522 F.2d 302, 312 [5 ELR 20557] (3d Cir. 1975); see also Union Elec. Co. v. E.P.A., 593 F.2d 299, 305-06 [9 ELR 20154] (8th Cir. 1979) (rejecting contention that potential for noncompliance penalties requires different result from Fry) cert. denied, 444 U.S. 839 (1979).

We believe the same result is required by the structure and objectives of the CWA's enforcement scheme. Much like the CAA, the CWA provides various enforcement options for alleged violations. The EPA may assess an administrative penalty, 33 U.S.C. § 1319(g), commence a civil enforcement action in district court, 33 U.S.C. § 1319(b), or issue a compliance order, 33 U.S.C. § 1319(a). We agree with defendants that pre-enforcement review of compliance orders would render that option a meaningless alternative to bringing a civil enforcement action at the outset, and effectively eliminate the compliance order as a means of expeditiously abating violations of the CWA without resort to judicial process. It is doubtful Congress intended such a result. See generally Zimmerman v. North American Signal Co., 704 F.2d 347, 353 (7th Cir. 1983) ("a court should not construe a statute in a way that makes words or phrases meaningless, redundant, or superfluous").

Plaintiff's authority does not persuade us that this conclusion is incorrect. Statutory preclusion pursuant to 5 U.S.C. § 701(a)(1) was not a issue in Swanson v. United States, 600 F. Supp. 802 [15 ELR 20206] (D. Idaho 1985). See 600 F. Supp. at 805. Nor was the court in Conoco Inc. v. Gardebring, 503 F. Supp. 49 [11 ELR 20497] (N.D. Ill. 1980), faced with the issues presented here. In Conoco, the court was asked to declare that the EPA lacked authority to interpret state regulations in a manner contrary to the interpretation given by the state agency. The court distinguished the Fry case as follows:

In contrast to . . . Fry plaintiffs here are not seeking to delay enforcement of applicable regulations. Rather they are raising purely legal issues regarding the scope of the [EPA] Administrator's authority in interpreting the state implementation plan and his duty to affirmatively remedy an inadequate plan. [20 ELR 20003] 503 F. Supp. at 51. Here, however, plaintiff has challenged the EPA's implementation of federal regulations. Further, the issues raised by plaintiff's challenge are not "purely legal;" in addition to constitutional challenges to the regulatory scheme, plaintiff also challenges the factual determinations of the EPA in delineating the "wetland" boundaries. Therefore we believe the analysis in Fry is appropriate here and accordingly conclude that review is precluded under 5 U.S.C. § 701(a)(1).

One additional point should be made. Plaintiff has pointed out the dilemma imposed upon recipients of CWA compliance orders: the alleged violator must either comply with an order it believes is unlawful, often at considerable expense, or risk substantial per diem penalties for noncompliance if it chooses to challenge the order. See 33 U.S.C. § 1319(d). We note first that this does not necessarily support pre-enforcement review: the dilemma exists regardless of whether the challenges are heard in a suit for an injunction such as plaintiffs or in the action for enforcement of the order brought by the EPA: either way penalties are accruing while the challenges are heard. See also Union Elec. Co. v. E.P.A., 593 F.2d at 305-06 (potential for noncompliance penalties does not violate due process rights); Wagner Seed Co. v. Daggett, 800 F.2d 310, 315-16 [16 ELR 21001] (2d Cir. 1986) (accord). Nonetheless, we believe there exists a certain risk in leaving the timing of the suit in the hands of the government while per diem penalties accrue. For the reason, we reiterate here the admonishment set forth in Fry: the EPA should proceed expeditiously with enforcement proceedings in the event of noncompliance so as to minimize any potential penalty; failure to do so will give rise to a laches defense with regard to penalties sought under 33 U.S.C. § 1319(d). Fry, 554 F.2d at 891 & n.4.

With the foregoing noted, we conclude that Congress intended for judicial review of a compliance order to occur if and when the EPA seeks to enforce the order in district court under 33 U.S.C. § 1319(b). Defendants' motion to dismiss is therefore granted.

1. Our disposition makes it unnecessary to address defendants' other contentions, namely that sovereign immunity applies and that a compliance order is not a "final agency action" and therefore not subject to judicial review.