Petition for Writ of Certiorari — Smithfield Foods, Inc. v. United States

Supreme Court, U8 ;

sie Me) Sa: eas

991 @ 6 O MAy 4 - oggp

No. 99-___ :

IN THE

Supreme Court of the Gnited States

SMITHFIELD Foops, INC.,

SMITHFIELD PACKING COMPANY, INC., AND

GWALTNEY OF SMITHFIELD, LTD.,

Petitioners,

V.

UNITED STATES OF AMERICA,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

PETITION FOR A WRIT OF CERTIORARI

MICHAEL H. COLE PATRICK M. RAHER

CHARLES T. GRIFFITH JOHN G. ROBERTS, JR.*

SMITHFIELD FOODS, INC. JAMES T. BANKS

200 Commerce Street GREGORY G. GARRE

Smithfield, Virginia 23430 LORANE F. HEBERT

(757) 365-3030 HOGAN & HARTSON L.L.P.

555 Thirteenth Street, N.W.

Washington, D.C. 20004

(202) 637-5810

* Counsel of Record Counsel for Petitioners

'

\v

QUESTIONS PRESENTED

1. Whether the Fourth Circuit properly held—in conflict

with Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foun-

dation, Inc., 484 U.S. 49, 61 (1987), and the intent of Con-

gress—that the Clean Water Act permits the United States to

bring a penalty action after a State—the primary regulatory

authority under the statute—has agreed “not to assess or

otherwise seek civil penalties on the condition that the

violator take some extreme corrective action.”

2. | Whethér the Fourth Circuit properly held—in conflict

with the First and Eighth Circuits—that state law must mimic

federal law to be regarded as “comparable” under the Clean

Water Act, so that a state-enforcement action precludes a

federal penalty action for the same violations.

3. | Whether the Fourth Circuit properly held—in conflict

with the D.C., Fifth, Sixth, Ninth, and Tenth Circuits—that

petitioners had fair notice that they were violating the Clean

Water Act where the State—the primary regulatory authority

under the statute—specifically assured petitioners that they

would be in compliance with a state limit not regulated by

federal law by taking certain corrective action, and where

EPA had notice of such assurances but waited five years

before filing an action for alleged violations of that limit, by

which time substantial penalties had accrued. '

(1)

il

PARTIES TO THE PROCEEDING AND

RULE 29.6 STATEMENT

The caption contains the names of all parties that appeared

in the Fourth Circuit. Smithfield Packing Company, Inc. and

Gwaltney of Smithfield, Ltd. are wholly-owned subsidiaries

of Smithfield Foods, Inc. Smithfield Foods, Inc. is a publicly

held corporation and has no parent corporation. No publicly

held entity owns 10% or more of Smithfield Foods, Inc.’s

stock.

se

OMB Ay eite 0 ables

ill

TABLE OF CONTENTS

Page

PRP Rree 6 Oe PEL OD vo cviscnescecacccaceodceescunseancoceiz, 1

PARTIES TO THE PROCEEDING AND RULE

dy 3). os ga REE Ri enna ee Re rams mena il

Pee I PRT I FE sskcsiisccsicctcncesaccacadansarsceccces V

EERIE eae ene OTT ee l

es RSE ISP a pe me 2

CONSTITUTIONAL AND STATUTORY

gS ke ROR a Be cb rrr 2

a Ss sess nc bbinicadeeassiaass 3

EPL REEINT OF THE CASE oo viccccccscccccosccsoccecsacscsscs 4

A. State Enforcement Action .................ccc..cceeeeee.

B. Federal Overfile Action. ....................ccc.cccsceeee. 0)

REASONS FOR GRANTING THE WRIT................ 12

I. THE FOURTH CIRCUIT’S DECISION

CONFLICTS WITH THIS COURT’S DE-

CISION IN GWALTNEY AND SECTION

510 OF THE CWA ON THE DISCRE-

TION RESERVED TO THE STATES TO

ENFORCE MORE STRINGENT ENVI-

RONMENTAL STANDARDS THAN

THOSE IMPOSED BY FEDERAL LAW...... 12

1V

TABLE OF CONTENTS—Continued

Page

Il. THE FOURTH CIRCUIT’S DECISION

CONFLICTS WITH THE DECISIONS OF

OTHER FEDERAL CIRCUITS ON THE

PRECLUSIVE EFFECT OF SECTION

SOM BKGHA Mi) OF THE CWA. ...05...cccccsessecs. 17

Ill. THE FOURTH CIRCUIT’S DECISION

CONFLICTS WITH THE DECISIONS OF

OTHER FEDERAL CIRCUITS ON THE

NOTICE REQUIRED BEFORE A PARTY

MAY BE PENALIZED FOR VIOLATING

REGULATORY REQUIREMENTS .............. 24

ea IIT oo oercsisc crcics wate sa cedcdeis acd Gea ak 29

APPENDICES

Appendix A:

Opinion of the United States Court of Ap-

peals for the Fourth Circuit (September 14,

FEF nthcsotnonsnunnaaeunaaee la

Appendix B:

Opinion of the United States District Court

for the Eastern District of Virginia (August

Oy SIE hci Dcidcnntakceasetuann ata caaoe! 29a

Appendix C:

Opinion of the United States District Court

for the Eastern District of Virginia (May

Pe Fee icin dnteneadaedina acme 63a

V

TABLE OF CONTENTS—Continued

Page

Appendix D:

Order of the United States Court of Ap-

peals for the Fourth Circuit denying peti-

tion for rehearing and rehearing en banc

(TOMY GFE E iviinhenccscth seniatusntdvaoisaaiasauaies ll4a

Appendix E:

Order granting extension of time to file pe-

tition for a writ of certiorari (March 27,

WOUMOD i tnicsschairatstiimatianceimmadnsn nannies 1l6a

Appendix F:

Statutory provisions involved ...............cc..0008 117a

vi

TABLE OF AUTHORITIES

Page

CASES:

American Paper Inst., Inc., v. EPA, 890 F.2d

BGP CHCA. TI ncsitcpcionaiicenas 13

Aminoil U.S.A., Inc. v. California State Water

Resources Control Bd., 674 F.2d 1227

CU Cae. TD cictinsssicccscccdicanticdanademakaaie 16

Arkansas v. Oklahoma, 503 U.S. 91 (1992)................ 16

Arkansas Wildlife Fed'n v. ICI Americas, Inc.,

29 F.3d 376 (8th Cir. 1994), cert. denied,

$13 US. S307 OSGi... cane 20,21,22,23,24 —

Boise Cascade Corp. v. EPA, 942 F.2d 1427

Cis Cae, BE isis ccscncceseeee cee 13

Braxton v. United States, 500 U.S. 344 (1991)........... 18

Citizens for a Better Env't — Cal. v. Union Oil

Co. of Cal., 83 F.3d 1111 (9th Cir. 1996),

cert. denied, 519 U.S. 1101 (1997) ...................000 24

Diamond Roofing Co. v. Occupational Safety

& Health Rev. Comm'n, 528 F.2d 645 (Sth

Che, UPB ivcincixccentctteseciiesicdaedennoe 28

Diebold, Inc. v. Marshall, 585 EF 2d 1327 (6th

Cie, SOFIA. cinucsucscoscssacieesecoeriacs een 29

District of Columbia v. Schramm, 631 F.2d

S34 (D4. Cie, TS ricci 17

Friends of Santa Fe County v. LAC Minerals,

Inc., 892 F. Supp. 1333 (D.N.M. 1995) ................ 25

General Elec. Co. v. EPA, 53 F.3d 1324 (D.C.

OWE. 1G assis isicacsanisasavcccssanetieeacuesmniea naman 26,27

Grayned v. City of Rockford, 408 U.S. 104

CEDT AD csxpavsicccsuahsnadeccscnianaane ane 26

Gwaltney of Smithfield, Ltd. v. Chesapeake

Bay Found., Inc., 484 U.S. 49 (1987) ...............00. passim

Vil

TABLE OF AUTHORITIES—Continued

Page

CASES:

Harmon Indus., Inc. v. Browner, 191 F.3d 894

ee nae cch-snsscceutcistiaciedsabensincncs Maaccanecestectie 17

Jones v. City of Lakeland, 175 F.3d 410 (6th

Cir. 1999), rehearing en banc granted,

204 F.3d 680 (July 29, 1999) oo. ieelaabiaoes 23

Kent Nowlin Constr. Co. v. Occupational

Safety & Health Review Comm'n, 593

ie ee IS BNF Ri ovcdsckosicshisddabcansndecanncnannds 27,28

Lloyd C. Lockrem, Inc. v. United States, 609

Fe Pe UE Ga BIO sinha soccintinciatinspitovoneniacnesans 27,28

Mullane v. Central Hanover Bank & Trust

in Bee ee lcci aiivededsccctnsiscncnéucaienan’ 26

New York Coastal Fishermen's Ass'n v. New

York City Dep't of Sanitation, 772 F.

I. TG CE 8c BIEN sence biewinitinininsencnmnnstena 25

North & South Rivers Watershed Ass'n v.

Town of Scituate, 949 F.2d 552 (1st Cir.

Old Timer, Inc. v. Blackhawk-Central City

Sanitation Dist., 51 F. Supp. 2d 1109 (D.

NE SRR re atte iene Cae PSUR ED STERN REN 25

Saboe v. Oregon, 819 F. Supp. 914 (D. Or.

NI issih diaich leak cenghesgdpcaanddslonaadeksebeaeconanmnbaninabts 16

Sierra Club v. Colorado Ref. Co., 852 F.

I, TEE, CD, TID oiseisisicsinsiasner csnnses. 25

Southern Ohio Coal Co. v. Office of Surface

Mining, Reclamation & Enforcement,

Dep't of Intevior, 20 F.3d 1418 (6th Cir.),

cert. denied, 513 U.S. 927 (1994) ou... ccc eee eeee 16

Vill

TABLE OF AUTHORITIES—Continued

Page

CASES:

Supporters to Oppose Pollution, Inc. v. The

Heritage Group, 973 F.2d 1320 (7th Cir.

a, |) SERENE ROPE be Poor RATER ne TE EOP OO Ne Bar 16

United States v. AM General Corp., 34 F.3d

Oe 6 a BE viele ieee cciaddinalh Slndantnanicnsinnnens 29 ;

United States v. District of Columbia, 933 F.

NN Me I PU iccsdicccacietianidncsentsistencensscixes 16 ;

United States v. Homestake Mining Co., 595 !

Far GG, Feiss tens 21 ;

Wheeler v. Barrera, 417 U.S. 402 (1974)...............004 20

CONSTITUTION: )

ha RR, IF vsicsttitticacncedpeacaniaiaeae 2

STATUTES:

Ee BIE Biscisivtiieessasiiccitincceeeed cameron 2

Oe PE ciecicsccceldoeon ena 2

BF Behe: 0 Sh atincteeeincaciaa aeee 5,13

RS ree 0 RR itisisenacescs cameramen: 3,11,12

Fe Aha sain dna 3,18

SBS eS ome Sk). 1 SAR an mone nMny mene nr ater 19

DS Ur We Br IE hccsiesosslninthieumcicaioian S47 :

BS ce lis BEAU PEMD isc scracoioneetconctsiniann 10,17,18,19 :

HUA SI 5

Be a Fae ctr elcoaaigmiimaas 2,4,11

Be SS le ESET IO hicveisnid eadeainnnsetosiocennennae 14

Re TE See Ce Ria dcseeisoenlinvtcniicsaiis an enegmnmerigicns 17

ye Ce ee en 2. ee ae Sets ee) ee oO

1X

TABLE OF AUTHORITIES—Continued

Page

STATUTES:

ia Aa te rails casiceisaphanibuisccantaiendvcsluads 19

a ee i iat ttre patteacentndeatdidcicccin 19

he © re ak eri teenies 19

VE Se Bk UD oie iniis ch thnantdcecsssineasncaisnnsies 19

We a i RD ais tdnch eccadticctabnssn ddtmacnonssacnhaibenn 19

RR a ee iaiaidida denoted sathcicenncicetaninnenin 19

Va. Admin. Code tit. 9, § 25-31-910(B)(3)...........0..... 20

Va. Admin. Code tit. 9, § 25-40-10, et seq... 5

RULE:

Mie I a a a eg 18

OTHER:

Heather L. Clauson, How Far Should the Bar

on Citizen Suits Extend Under § 309 of the

Clean Water Act?, 27 Envtl. Law (1997)............ ms 25

EPA, Memorandum of Understanding

Regarding Permit and Enforcement

Programs Between the State Water

Control Board and the Regional

Administrator, Region III Environmental

PE EFF iacisssnkcnedanensasnnacegncacecsnines 5

EPA, Supplemental Guidance on Section

309(g)(6)(A) of the Clean Water Act

ON se aie laced scchcak acincebbiptninanmadicndesesansssnnanns 20

Julia A. Glazer, The Clean Water Act

Enforcement Provision: What Constitutes

Diligent Enforcement Under Comparable

State Law, 23 No. Ky. L. Rev. 129 (1995)............ 25

X

TABLE OF AUTHORITIES—Continued

OTHER:

Arne R. Leonard, When Should an

Administrative Enforcement Action

Preclude a Citizen Suit Under the Clean

Water Act?, 35 Nat. Res. J. 555 (1995).................

Steven Russo, States, Citizens, and the Clean

Water Act: State Administrative

Enforcement and the Diligent Prosecution

Defense, 4N.Y.U. Envtl. L. J. 211 (1995)...

Webster's Third New International Dictionary

OUND sicxicascasChcnschan sncaasubaehdates Ge neat sieecaireneucdorasaniaiad

Page

IN THE

Supreme Court of the GQnited States

SMITHFIELD Foops, INC.,

SMITHFIELD PACKING COMPANY, INC., AND

GWALTNEY OF SMITHFIELD, LTD.,

Petitioners,

V. .

UNITED STATES OF AMERICA,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioners Smithfield Foods, Inc., Smithfield Packing

Company, Inc., and Gwaltney of Smithfield, Ltd. (collec-

tively, “Smithfield”), respectfully petition this Court for a

writ of certiorari to review the judgment of the United States

Court of Appeals for the Fourth Circuit in this case.

OPINIONS BELOW

The opinion of the Fourth Circuit is reported at 191 F.3d _

516 and reproduced in the appendix hereto (“‘App.”) at la.

The opinion of the District Court for the Eastern District of

Virginia on liability issues is reported at 965 F. Supp. 769

and reproduced at App. 63a. The opinion of the District

2

Court on penalty issues is reported at 972 F. Supp. 338 and

reproduced at App. 29a.

JURISDICTION

The judgment of the Fourth Circuit was entered on Sep-

tember 14, 1999. App. la. The Fourth Circuit denied a

timely petition for rehearing and rehearing en banc on

January 6, 2000. App. 114a. On March 27, 2000, the Chief

Justiee entered an Order extending the time for filing a

petition for certiorari to and including May 5, 2000. App.

116a. The jurisdiction of the Fourth Circuit was based on 28

U.S.C. § 1291. The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Fifth Amendment to the United States Constitution

provides in pertinent part: “No person shall * * * be de-

prived of life, liberty, or property, without due process of

law.” U.S. Const. amend. V.

Section 510 of the Clean Water Act (“CWA” or “Act’’), 33

U.S.C. § 1370, provides in pertinent part:

Except as expressly provided in this [Act], nothing in

this [Act] shall (1) preclude or deny the night of any

State * * * to adopt or enforce (A) any standard or

limitation respecting discharges of pollutants * * *;

except that if an effluent limitation * * * is in effect

under this [Act], such State * * * may not adopt or

enforce any effluent limitation * * * which is less

stringent than the effluent limitation * * * under this

[Act].

Section 309(g)(6)(A)ii) of the CWA, 33 USC.

§ 1319(g)(6)(A)(1i), provides in pertinent part:

[A]ny violation—

* * *

(11) with respect to which a State has com-

menced and is diligently prosecuting an action

under a State law comparable to [Section

-309(g) of the Act, 33 U.S.C. § 1319(g)]

* * *

shall not be the subject of a civil penalty action under

[Section 309(d) of the Act, 33 U.S.C. § 1319(d)].

Sections 309(d), 309(g), and 510 are reproduced in

full at App. 117a-124a.

INTRODUCTION

This case arises out of the imposition of a civil pen-

alty—$12.6 million—that when entered was the largest ever

assessed under the CWA. Yet the most significant aspect of

this case is not the size of that penalty, but the policy dispute

that arose between state and federal authorities over whether

a penalty was appropriate at all. Smithfield was caught in the

middle of that dispute. Under an agreement with Virginia

regulatory authorities—charged with primary responsibility

under the CWA to enforce the regulatory standards at is-

sue—Smithfield invested millions of dollars to comply with

a State limitation on an effluent constituent (phosphorous) not

regulated by federal law, taking action it was otherwise under

no obligation to take and that conferred a substantial benefit

on the Commonwealth and its residents. Years later, how-

ever, Smithfield was blind-sided by federal authorities in this

action seeking penalties for exceedences of the very limits

that Virginia regulatory authorities—in order to secure

Smithfield’s agreement to enter into a multimillion dollar

compliance plan—had assured Smithfield it need not meet.

4

In addition to concerns about the fundamental fairness of a

regulatory regime that permits such a result, this case raises

significant federalism concerns about the respective roles of

the States and the federal government in administering one of

the Nation’s most important and far-reaching environmental

laws. In enacting the CWA, Congress specifically sought to

promote comity by giving the States primary authority to

enforce the limits in the permits they issue under the Act, and

the discretion to “adopt or enforce” environmental standards

more stringent than those imposed by federal law. 33 U.S.C.

§ 1370. By bringing this overfile action for exceedences

inherent in a state-approved compliance plan, EPA has

“curtail[ed] considerably” the “discretion” of a primary

regulatory authority “to enforce the Act in the public inter-

est,” Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Found.,

Inc., 484 U.S. 49, 61 (1987), and thereby upset Congress’s

intentions in enacting the CWA. The Fourth Circuit below

not only sanctioned this result, but did so in a manner con-

trary to the decisions of this Court and other federal courts of

appeal. The multiple conflicts engendered by the decision

below concern matters of grave importance. This Court

should grant review and resolve them here.

STATEMENT OF THE CASE

Smithfield operates two pork processing plants in Isle of

Wight County, Virginia. Until recently, these plants dis-

charged treated effluent into the Pagan River under permits

issued by the Virginia State Water Controi Board (“Board”’).

The Board is authorized by EPA to issue such permits under

the CWA, see 33 U.S.C. § 1342(b), and has “primary”

authority to enforce the effiuent limitations they contain. See

id. § 1251(b); EPA, Memorandum of Understanding Re-

garding Permit and Enforcement Programs Between the

State Water Control Board and the Regional Administrator,

Region III EPA \ (1975). This case arises over a dispute

5

between federal and state authorities over enforcement of a

state limit contained in Smithfield’s permit.

A. State Enforcement Action.

1990 Permit and Special Order. In 1988, the Board

promulgated regulations that, for the first time, limited the

amount of phosphorous—a substance not regulated with

respect to meat processors or the Pagan River under federal

law—that could be discharged into Virginia waterways. See

Va. Admin. Code tit. 9, § 25-40-10, et seq. Shortly thereaf-

ter, Smithfield filed an action in state court, arguing in part

that the limit the Board sought to impose was not technologi-

cally achievable. Meanwhile, on January 4, 1990, Smith-

field’s existing permit was modified to include the phospho-

rous limit and a three-year compliance schedule requiring

Smithfield to upgrade its wastewater treatment facilities to

meet the limit. Smithfield promptly frled a challenge to the

modified permit (the “1990 permit’) with the Board on the

same grounds raised in state court. If successful, Smith-

field’s administrative and judicial challenges could have

prevented the Commonwealth from applying its new phos-

phorous limit not only to Smithfield but throughout Virginia.

Negotiations between the parties ensued. On March 21,

1990, Smithfield’s administrative challenge was settled by

means of a consent order (the “1990 Special Order’). Under

that Order, the Board agreed to postpone commencement of

the 1990 permit’s compliance schedule in exchange for

Smithfield’s agreement to study a proposal that it reroute its

wastewater to a treatment plant operated by the Hampton

Roads Sanitation District (““HRSD”)}—something Smithfield

was otherwise under no obligation to do. This solution

would not only allow the Board to achieve the broader

environmental objective of completely eliminating Smith-

field’s discharge of effluent into the Pagan River, but the

resulting pipeline would also allow the Town of Smithfield

6

and other area residents to hook up to HRSD, removing their

pollutants from the Pagan River as well. A capy of the 1990

Special Order was sent to EPA.

1991 Special Order. On May 9, 1991, the Board issued

another order (the “1991 Special Order”) which resolved

Smithfield’s judicial challenge to the state phosphorous

standard. That Order required Smithfield to advise the Board

no later than June 14, 1991 of its “commitment to connect to

HRSD or to upgrade [its] facilities to comply with the * * *

phosphorous standard.” 4th Cir. J.A. 79 (emphasis added).

The Order also required Smithfield—f it decided to connect

to HRSD—to do so within three months of notification by

HRSD that the connecting pipeline was available. If Smith-

field elected not to connect to HRSD, the Order required it to

submit, by August 15, 1991, a schedule for completing the

facility upgrades necessary to comply with all effluent

limitations. Pursuant to the Order, Smithfield dismissed its

judicial challenge to the phosphorous standard. A copy of

the 1991 Special Order was sent to EPA.

On June 7, 1991, Smithfield notified the Board of its deci-

sion to connect to HRSD. Thus, after eighteen months of

negotiations, the Board obtained a commitment from Smith-

field to completely eliminate its discharges into the Pagan

River, with the further result that the Town of Smithfield and

other area residents would also stop discharging their pollut-

ants into the river by connecting to HRSD. This result

ultimately benefited the environment and the people of

Virginia more than continuing discharges in compliance with

the new phosphorous limit would have—assuming that limit

would have even survived Smithfield’s legal challenges.

1992 Permit. In 1991, Smithfield’s permit was due for

routine reissuance. The Board prepared and submitted for

EPA review and public comment a draft permit that carried

forward the standards in the modified 1990 permit. To

7

ensure that the permit would be construed in a manner

consistent with its settlement with the Board, Smithfield

reminded the Board in writing on October 1, 1991, that the

compliance dates in the draft permit could not be met “now

that we have agreed to abandon plans to upgrade our existing

facilities and tap onto HRSD when it becomes available,”

and requested that

if [the] compliance dates and milestones [were] required

in the proposed permit, some documentation or letter be

provided by the State Water Control Board stating that

alternate compliance will be maintained with Smithfield’s

agreement to connect to HRSD as soon as it becomes

available regardless of the time frame in which this oc-

curs. [4th Cir. J.A. 84 (emphasis added). ]

On October 10, 1991, the Board assured Smithfield that it

would be in compliance if it connected to HRSD pursuant to

the agreement and that it was not required to meet the

phosphorous limit in the permit during the interim:

The compliance schedules and related goal dates con-

tained in the permit are there to afford the permittee nec-

essary time to comply with the established effluent limi-

tations. Any special order agreements relative to compli-

ance * * * that have been approved by the Board take

precedence over the VPDES Permit. |Id. 86 (emphasis

_ added). ]

EPA received a copy of this written response—just as it had

received copies of the Special Orders reflecting the parties’

settlement agreement as to how Smithfield would meet the

phosphorous limit—and attached the copy to its approval of

; the new permit kept in its files.

On January 3, 1992, the Board issued the new permit (the

“1992 permit’) to Smithfield. Although the 1992 permit

maintained the new phosphorous limit, it was clear from the

8

1991 Special Order and the October 1991 exchange between

the parties that the Board would consider Smithfield in

compliance so long as it connected to HRSD within three

months of availability. The 1991 Special Order required

Smithfield to upgrade its own treatment facilities to comply

only if it did not connect to HRSD, and the October 1991

exchange—provided to EPA—confirmed that the Order

“({took] precedence” over the permit. /d.!

Smithfield’s Corrective Action. After several delays not

attributable to Smithfield, HRSD eventually completed

construction of the pipeline, and by August 1997, Smithfield

had completely ceased discharging effluent into the Pagan

River and was routing all its wastewater to HRSD. In

connecting to HRSD, Smithfield spent over $2.7 million

upgrading its own facilities so that effluents could be prop-

erly pretreated before entering the HRSD system, plus some

$300,000 for a pump station to serve the Town of Smithfield

so that its wastewater could be routed to HRSD. Smithfield’s

annual user fees to HRSD for treatment are expected to total

more than $2 million. Thus, Smithfield has and will continue

to spend millions of dollars in cooperating with the Board to

| The 1992 Permit also established new limits for ammonia, cyanide,

and CBOD, requiring compliance by May 13, 1994. 4th Cir. J.A. 165. In

February 1992, Smithfield advised the Board that it planned to comply

with these limits by connecting to HRSD, and the Board confirmed that

Smithfield’s plan was acceptable. /d. Subsequently, in November 1994,

the 1991 Special Order was amended to provide that Smithfield “may

achieve compliance with the [effluent limitations for CBOD, total

cyanide, and ammonia] by connecting to the HRSD system.” /d. 166.

This amendment thus exempted Smithfield from complying with the

limitations for these effluents pending connection to HRSD, just as the

1991 Special Order itself provided that if Smithfield connected to HRSD_

it would not be required otherwise to comply with the limitation on

phosphorous.

ee EEE

Ree ve

9

achieve the goal of ending Smithfield’s discharges into the

Pagan River.?

B. Federal Overfile Action.

Just as Smithfield was about to connect to HRSD, the

United States brought this action against it for failing to meet

the very state law limits the Board had assured Smithfield it

was not required to attain during the interim. Although EPA

had ample information since 1991 that made clear that—as a

result of the compliance plan entered into as part of the

Board’s enforcement action—Smithfield was not required to

comply with the phosphorous limit pending connection to

HRSD, EPA never objected and did not bring this action

until December 16, 1996, more than five years later.3

Liability Phase. On March 10, 1997, well before discov-

ery had concluded, the United States moved for partial

summary judgment on liability. App 63a. The District Court

granted that motion on May 30, 1997, concluding that

Smithfield was liable because the 1992 Permit “did not

incorporate, nor was it conditioned, revised, or superseded

by, the Board’s Special Orders issued prior to the filing of

this action.” App. 82a. The court further ruled that, in any

event, the 1990 and 1991 Special Orders were not relevant

because EPA had never affirmatively agreed to be bound by

2 Smithfield’s commitment to connect to HRSD was essential to

enable HRSD to build the pipeline and upgrade its own facilities. To

obtain funding for the project, HRSD applied to the Board for assistance

from the Virginia Revolving Loan Fund, which is funded largely by EPA.

EPA undertook a close review of the project in connection with the

Commonwealth’s approval of over $50 million in funding for HRSD to

upgrade its facilities to implement the 1991 Special Order.

3 The Commonwealth declined the invitation of the United States to

join the federal suit and filed its own action in Isle of Wight Circuit Court

on August 30, 1996, seeking injunctive relief and civil penalties against

Smithfield for exceeding certain limitations for substances other than

phosphorous, and penalties for a rogue employee’s destruction of records.

10

them—even though it had received notice of and had never

objected to them—and Smithfield had never taken the formal

steps necessary to obtain a permit modification. App. 91a,

100a-101a.

The District Court also held that EPA’s action was not

barred by Section 309(g)(6)(A)(i1) of the CWA. That provi-

- sion precludes a federal penalty action where a state agency

has “commenced and is diligently prosecuting an action

under State law comparable to [Section 309(g)],” 33 U.S.C.

§ 1319(g)(6)(A)(ii), which in tum provides for federal

administrative penalty actions. Narrowly construing that

provision, the court concluded that Virginia law was not

comparable to Section 309(g) because at the time the Board

commenced its action it could impose administrative penal-

ties only with the consent of a violator, and because Virginia

law did not provide for public participation rights identical to

those found in Section 309(g). App. 104a-112a.

The court further rejected Smithfield’s argument that the

action was barred by Section 510 of the CWA, which pro-

vides that “nothing in [this Act] shall * * * preclude or deny

the right of any State * * * to adopt or enforce” state stan-

dards more stringent than those in effect under the Act, such

as Virginia’s phosphorous limit. 33 U.S.C. § 1370. In so

doing, the court dismissed out of hand Smithfield’s argu-

ment—based on this Court’s decision in Gwaltney, 484 U.S.

at 61—that the authority of Virginia to enforce its own, more

stringent phosphorus limit as it sees fit includes the discretion

to forgo penalties in order to achieve a greater environmental

goal—in this case, the complete elimination of discharges

into the Pagan River. App. 112a-113a.

Penalty Phase. The case then proceeded to the penalty

phase. The CWA authorizes the imposition of penalties for

each day that a violation occurs. 33 U.S.C. § 1319(d). The

District Court found Smithfield liable for violating both daily

1]

and monthly limits. While acknowledging federal circuit

court precedent rejecting such an approach as double count-

ing, the court nevertheless counted each violation of a

monthly limit as a violation for every day of that month, and

also counted as separate days of violation exceedances of

daily limits in months Smithfield had also exceeded the

monthly limit for the same substance. App. 32a-33a.

Violations of the state phosphorous limit accounted for 86%

of the effluent limit violations found against Smithfield.

In assessing a penalty under the CWA, a court is required

to consider, among other things, “the economic benefit (if

any) resulting from the violation,” “any good-faith efforts to

comply with the applicable requirements,” and “such other

matters as justice may require.” 33 U.S.C. § 1319(d). In

determining economic benefit, the District Court refused to

factor in the millions of dollars Smithfield spent to comply

with the permit by connecting to HRSD, and refused to give

Smithfield credit for good faith efforts to comply with the

applicable requirements because Smithfield’s understanding

of what those requirements were—even though confirmed by

the Board—turmed out to be wrong, at least in the court’s

view. App. 49a n.16, 52a-54a.

The court set the penalty at $12.6 million. App. 62a. Thus,

in a case in which the court made no finding of bad

faith—and in which the penalized party was caught in the

middle of a dispute between federal and state regulating

authorities—the District Court entered what was at the time

the largest civil penalty in the history of the CWA.

Fourth Circuit Proceedings. The Fourth Circuit affirmed,

save for a mathematical error that the District Court had

concluded was insignificant. App. 25a-26a. The court set

out the parties’ arguments on liability at length. But instead

of independently analyzing those arguments, it simply

adopted—with virtually no explanation—the District Court’s

ey:

legal conclusions. App. 1la-16a. Thus, the Fourth Circuit

“concur[red]” that “neither the Supreme Court’s ruling in

Gwaltney, nor § 510 of the CWA preclude the EPA from

bringing this enforcement action,” and that “Virginia’s

enforcement scheme is not sufficiently comparable to

§ 309(g) to bar the EPA from bringing its own independent

penalty action.” App. 15a-16a. As for the penalty issues, the

Fourth Circuit rejected Smithfield’s arguments that the

District Court impermissibly “double counted”’ violations,

failed to give Smithfield credit for its hook-up costs and user

fees in calculating economic benefit, and failed to take into

account Smithfield’s good faith efforts to comply by con-

necting to HRSD. App. 17a-20a, 22a-28a.

Smithfield timely filed a petition for rehearing and rehear-

ing en banc, which the Fourth Circuit denied. App. 114a.

This petition followed.

REASONS FOR GRANTING THE WRIT

I. THE FOURTH CIRCUIT’S DECISION CON-

FLICTS WITH THIS COURT’S DECISION IN

GWALTNEY AND SECTION 510 OF THE CWA

ON THE DISCRETION RESERVED TO THE

STATES TO ENFORCE MORE STRINGENT

ENVIRONMENTAL STANDARDS THAN THOSE

IMPOSED BY FEDERAL LAW.

In enacting the CWA, Congress declared its policy “to

recognize, preserve, and protect the primary responsibilities

and rights of States to prevent, reduce, and eliminate pollu-

tion.” 33 U.S.C. § 1251(b) (emphases added). To this end,

Congress not only gave the States primary authority to

enforce the limits in the permits they issue under the Act, see

id.,+ but specifically reserved to the States in Section 510 of

4 See also Gwaltney, 484 U.S. at 60 (citing legislative history indi-

cating that Congress “‘intend[{ed] the great volume of enforcement actions

13

the CWA the authority to “adopt or enforce” effluent limite-

tions and standards more stringent than those imposed by

federal law. /d. § 1370(1)(A) (emphasis added). As this

Court’s decision in Gwaltney underscores, this express

congressional reservation of authority would be meaningless

if States could not enforce their own, more stringent envi-

ronmental standards in the manner they deem most beneficial

to the public interest without interference from EPA.

In Gwaltney, the Court made clear that a penalty action

brought under the CWA should not be permitted to under-

mine the efforts of the primary regulatory authority to

achieve broad remedial action. There, the Court held that the

CWA’s “citizen suit” provision then in effect did not confer

jurisdiction over suits for past violations, emphasizing that

any other interpretation would create a “disturbing anomaly”

and a “danger,” due to the “potentially intrusive” nature of a

penalty action where the primary regulatory authority has

decided “not to assess or otherwise seek civil penalties on the

condition that the violator take some extreme corrective

action, such as to install particularly effective but expensive

machinery, that it otherwise would not be obliged to take.”

484 US. at 60-61. As the Court explained, if such a policy

decision by the primary regulatory authority could be second-

guessed by another enforcer “months or years later, in order

to seek the civil penalties that the [primary authority] chose

{under the CWA] be brought by the State”); Boise Cascade Corp. v. EPA,

942 F.2d 1427, 1433 (9th Cir. 1991) (“purpose of the Act [is] to afford

states as much control as possible over implementation and enforcement

of pollution controls”); American Paper Inst., Inc., v. EPA, 890 F.2d 869,

873 (7th Cir. 1989) (“legislative history [of the CWA] is replete with

statements recognizing that the states should play the leading role in

implementing the NPDES system”) (footnote omitted).

14

to forgo, then [its] discretion to enforce the Act in the public

interest would be curtailed considerably.” /d.°

In exercising its primary enforcement authority under Sec-

tion 510 in this case, the Commonwealth was attempting to

achieve—and did achieve—precisely the type of broad

remedial action contemplated in Gwaltney. The Board had

no authority to require Smithfield to connect to HRSD and

thus completely eliminate its discharges into the Pagan River.

In addition, it was faced with Smithfield’s legal challenges to

the phosphorous limit, which might well have succeeded and

prevented the Board from enforcing the limit at all. By

agreeing that Smithfield would not be required to meet the

phosphorous and other state limits until it took “extreme

corrective action” that it “otherwise would not be obliged to

take,” the Board was able to achieve far-reaching, long-term

goals—the complete elimination of Smithfield’s discharges

into the Pagan River (not to mention the removal of the

Town of Smithfield’s pollutants), as well as the preservation

of the phosphorous limit—tesults undeniably “in the public

interest.”

Under the principles embodied in Section 510 of the CWA

and outlined in Gwaltney, EPA should not have been per-

mitted to bring this enforcement action and seriously under-

mine the Board’s ability to achieve the same result in future

cases. Without explanation, however, the Fourth Circuit held

that “neither the Supreme Court’s ruling in Gwaltney, nor

§ 510 of the CWA preclude the EPA from bringing this

enforcement action.” App. 16a. But if the United States is

allowed to seek penalties in situations like this one—where

the limits involved are imposed solely as a matter of state

5 Although the penalty action at issue in Gwaltney threatened to

undermine the discretion of federal authorities, the Court expressly

recognized that “[t]he same might be said of the discretion of state

enforcement authorities.” 484 U.S. at 61 (emphasis added).

Ne

15

law—States will not be able to exercise the authority explic-

itly reserved to them by Congress in Section 510 to “adopt or

enforce” more stringent environmental standards in the

manner they believe best serves the public interest. Because

a regulated entity has little incentive to work with a State to

achieve a costly environmental goal if federal authorities can

step in “months or years later, in order to seek the civil

penalties the [State] chose to forgo,” the result is to imper-

missibly curtail the discretion explicitly reserved to the States

in Section 510. 484 U.S. at 61.6 Gwaltney specifically

contemplates and condemns this very result, and the Fourth

Circuit’s contrary decision merits this Court’s review.’

This case in fact presents an even more “disturbing anom-

aly” than the situation in Gwaltney. Id. at 60. Principles of

comity and federalism are expressly embodied in the CWA.

See supra at 12-13 & n.4. See also Arkansas v. Oklahoma,

503 U.S. 91, 101 (1992) (“The Clean Water Act anticipates a

partnership between the States and the Federal Govern-

ment”); Southern Ohio Coal Co. v. Office of Surface Mining,

Reclamation & Enforcement, Dep't of Interior, 20 F.3d 1418,

1427 (6th Cir.) (“the CWA sets up a system of ‘cooperative

federalism”), cert. denied, 513 U.S. 927 (1994); Aminoil

© When it acts as the primary enforcer of the CWA, the United States

often makes “a conscious decision not to seek civil penalties” in order to

achieve broader goals. United States v. District of Columbia, 933 F.

Supp. 42, 51 (D.D.C. 1996). The States, when acting as the primary

enforcer, should be granted the same discretion and, indeed, Section 510

of the CWA grants it to them.

7 The clear import of Gwaltney has not been lost on the lower courts.

See, e.g., Supporters to Oppose Pollution, Inc. v. The Heritage Group,

973 F.2d 1320, 1324 (7th Cir. 1992) (“An Administrator unable to make

concessions is unable to obtain them.”); Saboe v. Oregon, 819 F. Supp.

914, 918 (D. Or. 1993) (“It is doubtful that an alleged violator would

fully cooperate with [the state] to resolve [potential violations] if they

[sic] lacked assurance that the same violation would not be the subject of

a [separate] suit in federal court at some later time.”).

16

U.S.A., Inc. v. California State Water Resources Control Bd.,

674 F.2d 1227, 1229 (9th Cir. 1982) (CWA creates a “coop-

erative federal-state scheme for the control of water pollu-

tion” and a “delicate partnership between state and federal

agencies”) (quotations- omitted); District of Columbia v.

Schramm, 631 F.2d 854, 863 (D.C. Cir. 1980) (noting

“strong current of federalism in the Clean Water Act”).

Allowing federal authorities to undermine a State’s efforts to

enforce its own environmental standards pursuant to an

express reservation of authority upsets the balance of power

the Act seeks to maintain.

The Eighth Circuit was mindful of such considerations in

Harmon Industries, Inc. v. Browner, 191 F.3d 894 (8th Cir.

1999), where the court recently refused to allow a “second

enforcement action” by EPA under the Resource Conserva-

tion and Recovery Act (“RCRA”) “simply [to] fill the

perceived gaps it sees in a state’s enforcement action.” /d. at

901. If a second enforcement action were permitted, the

court explained, “[c]ompanies that reach an agreement

through negotiations with a state authorized by the EPA to

act in its place may find the agreement undermined by a later

separate enforcement action by the EPA ***. Such a

potential schism runs afoul of the principles of comity and

federalism so clearly embedded in the text and history of

RCRA.” /d. at 902.* In reaching a result contrary to Gwalt-

* Although the text of RCRA differs from the CWA in authorizing

the States to bring an enforcement action in lieu of the United States, see

42 USC. § 6926(b); Harmon, 191 F.3d at 899, the rationale supporting

the Eighth Circuit's decision applies here. Congress intended the States

to have primary enforcement authority over the programs they administer

under both Acts. See supra at 12-13 & n.4; Harmon, 191 F.3d at 901.

And although the United States may bring an action “to enforce any

provision” of the CWA, 33 U.S.C. § 1319%(g)(6)(A), no such action may

be brought where, as here, “a State has commenced and is diligently

prosecuting an action under a State law comparable to [federal law]." /d

§ 1319(g 6A). Moreover, as Gwaltney teaches, the authority to

see

7

ney, the Fourth Circuit below—by contrast—clearly lost

sight of the same principles embedded in the CWA.

il. THE FOURTH CIRCUIT’S DECISION CON-

FLICTS WITH THE DECISIONS OF OTHER

FEDERAL CIRCUITS ON THE PRECLUSIVE

EFFECT OF SECTION 309(g)(6)(A)(ii) OF THE

CWA.

The Fourth Circuit’s decision also conflicts with the deci-

sions of other federal circuits on the preclusive effect of

Section 309(g)(6)(A)(ii) of the CWA, providing another basis

for certiorari. See S. Ct. Rule 10(a); Braxton v. United

States, 500 U.S. 344, 347 (1991) (a “principal purpose’’ for

which this Court grants certiorari “is to resolve conflicts

among the United States courts of appeals’’).

Section 309(g)(6)(A)(ii) precludes a federal penalty action

for violations “with respect to which a State has commenced

and is diligently prosecuting an action under a State law

comparable to [Section 309(g) of the Act],” 33 U.S.C.

§ 1319(g)6)(A)(ii) (emphasis added), which provides for

federal administrative penalty actions. See id. § 1319(g).

Because Virginia law provides a system of enforcement,

penalties, and public participation rights fully “comparable”

to that of Section 309(g), EPA’s overfile action was pre-

cluded by Section 309(g)(6)(A)(i1).

At the time the Board commenced its action against Smith-

field, it had the authority to bring a civil action in state court

seeking up to $25,000 per day for violations of state permits,

and the authority to impose administrative penalties in the

same amount, subject to consent. See Va. Code §§ 62.1-

“overfile” under the CWA does not include the authority to undermine

the state enforcement program by seeking penalties a State has expressly

eschewed im exchange for voluntary compliance with a_ particular

remedial plan

18

44.15(8c), (8d); id. § 62.1-44.32. Compare 33 U.S.C.

§ .1319(g)(2) (administrative penalties of up to $10,000 per

day and $125,000 total). Because the threat of judicial

enforcement provided a real incentive to enter into consent

orders imposing administrative penalties, these two provi-

sions worked in tandem to achieve the same ends as Section

309(g). Moreover, in April 1996—while the Board was still

conducting its administrative action and before EPA filed its

penalty action—Virginia law was amended to provide for the

imposition of administrative penalties without consent. See

Va. Code §§ 10.1-1182, 10.1-1186(5), (10).?

In addition, at all relevant times during the Board’s en-

forcement action against Smithfield, Virginia law—like

Section 309(g)}—provided significant opportunities for public

participation by requiring that public notice be given of all

proposed enforcement actions and special orders, that the

public be allowed to comment on such proceedings, and that

the Board consider all comments before taking final action.

See Va. Admin. Code tit. 9, § 25-31-910(B)(3).

The Fourth Circuit nonetheless held that “Virginia’s en-

forcement scheme [was] not sufficiently comparable to

§ 309(g) to bar the EPA from bringing its own independent

4 The Court of Appeals below rejected Smithfield’s argument that

comparability should be gauged at the time the federal penalty action is

filed. See App. 13a n.2. But determining comparability at that point is

more consistent with the purposes of Section 309(g)(6)(A)(ii), not to

mention its text. See 33 U.S.C. § 1319(g)(6)(A)(ii) (federal action

precluded where “State has commenced and is diligently prosecuting an

action under a State law comparable to [Section 309(g) of the Act]”)

(emphases added). In any event, the state statutory scheme that existed

when Virginia initiated its enforcement action against Smithfield plainly

enabled the Commonwealth to promote the goals of the CWA—as is

evident from the result secured by the Board in this case—and, thus, was

sufficiently comparable to trigger preclusion under the approach taken by

other circuits. See infra at 19-23.

19

penalty action.” App. 15a-16a. In so holding, the Fourth

Circuit effectively embraced EPA’s position that state law

must “mimic” federal law to trigger preclusion. See EPA,

Supplemental Guidance on Section 309(g)(6)(A) of the Clean

Water Act 4 (1993) (“state law must essentially mimic the

substance of the federal provision”), cited in U.S. Ct. App.

Br. at 33. That approach not only conflicts with the plain

meaning of the statute, see Webster's Third New Interna-

tional Dictionary 461 (1986) (“comparable” means “having

enough like characteristics or qualities to make comparison

appropriate,” or “permitting or inviting comparison often in

one or two salient points only”) (emphases added),'° but with

the decisions of other circuits categorically rejecting such a

restrictive application of Section 309(g). See, e.g., Arkansas

Wildlife Fed'n v. ICI Americas, Inc., 29 F.3d 376, 381 (8th

Cir. 1994) (state law need not be “identical” to federal law),

cert. denied, 513 U.S. 1147 (1995); North & South Rivers

Watershed Ass'n, v. Town of Scituate, 949 F.2d 552, 556 (lst

Cir, 1991) (rejecting a “narrow reading” of the provision).

In stark contrast to the myopic inquiry conducted by the

Fourth Circuit below, the First and Eighth Circuits have

assessed comparability from an entirely different perspective,

looking to the “overall [state] regulatory scheme,” and

considering whether state and federal law have the “same

overall enforcement goals.” Arkansas Wildlife Fed'n, 29

F.3d at 381; accord Town of Scituate, 949 F.2d at 556

(looking to whether “overall scheme of the two acts [i.e.,

state and federal] is aimed at correcting the same violations,

thereby achieving the same goals”). Quite unlike the Fourth

Circuit, these courts have rejected “a narrow reading of

section 309(g)(6)(A), which turns on the logistical happen-

stance of statutory drafting,” and “ignores [the] important

'0 This Court itself has recognized that “*{c]omparable’ * * * does not

mean ‘identical.’” Wheeler v. Barrera, 417 U.S. 402, 420 (1974).

20

considerations” underlying the CWA. 949 F.2d at 556. This

approach squares with the plain meaning of “comparable,”

supra at 19, not to mention the “vigorous federalism under-

lying the Clean Water Act.” United States v. Homestake

Mining Co., 595 F.2d 421, 429 (8th Cir. 1979). ~

In Town of Scituate, the state enforcement agency issued an

administrative compliance order under a state statutory

provision that did not provide for the assessment of penalties.

In rejecting the contention that the provision under which the

order was issued was not comparable to Section

309(g)(6)(A)(ii) because it did not provide for penalties, the

First Circuit noted that another provision in the same statu-

tory scheme did so provide, and further observed that the two

provisions were “two coordinate parts [which] are cogs in the

same statutory scheme implemented by the State for the

protection of its waterways.” 949 F.2d at 556. Accordingly,

the court concluded, “[i]t is enough that the [state] statutory

scheme, under which the State is diligently proceeding,

contains penalty assessment provisions comparable to the

Federal Act, that the State is authorized to assess those

penalties, and that the overall scheme of the two acts is aimed

at correcting the same violations, thereby achieving the same

goals.” /d. The court similarly rejected the contention that

the state regime did not provide public participation rights

comparable to those found in Section 309(g), holding that

“{s]o long as the provisions in the State Act adequately

safeguard the substantive interests of citizens in enforcement

actions, the rights of notice and public participation found in

the State Act are satisfactorily comparable to those found in

the Federal Act,” regardless of whether the state scheme is

“identical to the Federal Act.” /d. at 556 n.7.

Significantly, in adopting this approach, the First Circuit

specifically recognized that “[dJuplicative actions aimed at

exacting financial penalties in the name of environmental

protection at a time when remedial measures are well under-

21

way do not further [the CWA’s] goal” of restoring and

maintaining the environmental integrity of the Nation’s

waterways. Jd. at 556. Instead, such actions can be “im-

pediments to environmental remedy efforts.” /d. (emphasis

added). That is precisely what Gwaltney teaches, yet the

Fourth Circuit failed to heed this lesson.

Arkansas Wildlife Federation is to the same effect. There,

the Eighth Circuit rejected the contention that the state law at

issue did not provide public participation rights comparable

to those found in Section 309(g). Expressly agreeing with

the reasoning of the First Circuit in Town of Scituate, the

court held that “even if the state law does not contain pre-

cisely the same public notice and comment provisions as

those found in the [CWA],” the “comparability requirement

may be satisfied so long as the state law contains comparable

penalty provisions which the State is authorized to enforce,

has the same overall enforcement goals as the federal CWA,

provides interested citizens a meaningful opportunity to

participate at significant stages of the decision-making

process, and adequately safeguards their legitimate substan-

tive interests.” 29 F.3d at 381 (emphasis added). In these

circumstances, the court held, “the state statute should be

presumed comparable unless the facts of the specific case

demonstrate” to the contrary. /d. at 382.!!

'! The Fourth Circuit’s decision also conflicts with Jones v. City of

Lakeland, 175 F.3d 410 (6th Cir. 1999). Expressly relying on Town of

Scituate and Arkansas Wildlife Federation, the Sixth Circuit in Jones

followed the same approach as the First and Eighth Circuits. See 175

F.3d at 415-417. There, the court held that the state law at issue con-

tained penalty and public participation provisions comparable to Section

309(g) where federal and state law shared the same “overarching goals”

~ and “significant commonalities.” /d. at 415. Notably—in rejecting “a

narrow, exacting interpretation of the word ‘comparable’ that requires

one-for-one equivalency”—the Sixth Circuit specifically recognized that

the bar on penalty actions “avoid{s} presenting an offending party with

inconsistent obligations imposed by a federal court, as a result of a

22

Under the approach of the First and Eighth Circuits, Vir-

ginia’s “overall regulatory scheme” is “sufficiently compara-

ble” to the federal program under Section 309(g) to preclude

EPA’s overfile action, “even if the [Virginia] law does not

contain precisely the same * * * provisions as those found in

the federal CWA.” /d. At the time EPA brought this overfile

action—and the Board was still conducting ifs enforcement

action—Virginia law provided for the imposition of admin-

istrative penalties without the consent of the violator. Even

at the time the Board commenced its action, Virginia’s

overall statutory scheme contained “penalty assessment

provisions comparable to the Federal Act * * * [and] the

overall scheme of the two acts [was] aimed at correcting the

sime violations, thereby achieving the same goals.” 949

F.2d at 556. In particular, the judicial and administrative

penalty provisions in effect were “two coordinate * * * cogs

in the same statutory scheme implemented by the State for

the protection of [Virginia’s] waterways.” /d. Moreover, by

requiring that public notice be given of all proposed en-

forcement actions and special orders, that the public be

allowed to comment on such proceedings, and that the Board

consider all comments before taking final action, Virginia

guarantees interested citizens a “meaningful opportunity to

participate at significant stages of the decision-making

process,” 29 F.3d at 381, and ‘“‘adequately safeguards their

legitimate substantive interests.” /d.; accord 949 F.2d at 556

n.7. Finally, any doubt as to whether the Virginia scheme

advances the same important interests as the CWA is an-

swered by the extreme corrective action that the Board

[penalty] action, and by another court or administrative agency, as a

result of an independent * * * state agency action.” /d. (emphasis added).

In failing to apply the bar here, the Fourth Circuit subjected Smithfield to

precisely the sort of “inconsistent obligations” Congress sought to avoid.

The Sixth Circuit has granted rehearing en banc in Jones, see 204 F.3d

680 (1999), underscoring the importance of this issue.

23

secured in this case—the complete elimination of Smith-

field’s discharges into the Pagan River.

The Fourth Circuit’s contrary decision deepens an existing

conflict on the scope of Section 309(g)(6)(A)(ii). In contrast

to the First and Eighth Circuits, the Ninth Circuit—like the

Fourth Circuit below—has given that provision an extremely

narrow reading. See Citizens for a Better Env't-Cal. v.

Union Oil Co. of Cal., 83 F.3d 1111 (9th Cir. 1996), cert.

denied, 519 U.S. 1101 (1997). Expressly rejecting the First

Circuit’s reasoning in Town of Scituate, the Ninth Circuit

held in Union Oil that Section 309(g)(6)(A)(11) does not

apply where the provision under which administrative action

is taken does not provide for penalties. /d. at 1117-18. This

conflict has further manifested itself among district courts in

other circuits.'!2, Commentators have highlighted the conflict

and have expressed the need for its resolution.'? This case

'2 Compare Old Timer, Inc. v. Blackhawk-Central City Sanitation

Dist., 51 F. Supp. 2d 1109, 1113-14 (D. Colo. 1999) (citizen suit

precluded only when state has commenced an administrative penalty

action against a polluter); Friends of Santa Fe County v. LAC Minerals,

Inc., 892 F. Supp. 1333, 1347 (D.N.M. 1995) (“section [309(g)(6)(A)(11)]

is narrowly drawn; its preclusionary effect applies only when * * * a state

is in the process of collecting or has collected administrative penalties”),

with Sierra Club v. Colorado Ref. Co., 852 F. Supp. 1476, 1484-85 (D.

Colo. 1994) (rejecting argument that state must actually seek penalties

before citizen suits are precluded); New York Coastal Fishermen's Ass'n

v. New York City Dep't of Sanitation, 772 F. Supp. 162, 165 (S.D.N.Y.

1991) (“it cannot be reasonably argued that only when a penalty is

actually imposed that a citizen suit is precluded”; such a reading is “an

overly technical interpretation” that would “unnecessarily undermine

state and local enforcement efforts”).

13 See, e.g., Heather L. Clauson, How Far Should the Bar on Citizen

Suits Extend Under § 309 of the Clean Water Act?, 27 Envtl. Law 967,

968 (1997) (“conflict among the circuits has resulted which needs to be

resolved”); Julia A. Glazer, The Clean Water Act Enforcement Provision:

What Constitutes Diligent Enforcement Under Comparable State Law, 23

No. Ky. L. Rev. 129, 129 (1995) (“The absence of guidance from the

24

presents an ideal opportunity for this Court to provide much-

needed guidance.

Il. THE FOURTH CIRCUIT’S DECISION CON-

FLICTS WITH THE DECISIONS OF OTHER

FEDERAL CIRCUITS ON THE NOTICE RE-

QUIRED BEFORE A PARTY MAY BE PENAL-

IZED FOR VIOLATING REGULATORY RE-

QUIREMENTS.

Further heightening the need for review is the conflict

between the Fourth Circuit’s decision and the decisions of

other federal courts of appeals on the notice required before a

party may be penalized for violating regulatory standards.

It is a fundamental principle of due process that a party

receive “fair notice” before being deprived of property.

Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

306, 314 (1950). “[B]ecause we assume that [a party] is free

to steer between lawful and unlawful conduct, we insist that

laws [provide] a reasonable opportunity to know what is

prohibited, so that [a party] may act accordingly.” Grayned

v. City of Rockford, 408 U.S. 104, 108 (1972). As a result, a

party cannot be assessed civil penalties under a regulatory

regime where it lacks fair warning of prohibited conduct.

See, e.g., General Elec. Co. v. EPA, 53 F.3d 1324, 1329

(D.C. Cir. 1995).

United States Supreme Court * * * concerning this provision has

produced conflicting opinions within the federal circuit courts.”); Arne R.

Leonard, When Should an Administrative Enforcement Action Preclude a

Citizen Suit Under the Clean Water Act?, 35 Nat. Res. J. 555, 582 (1995)

(“Currently, the circuits are in conflict regarding the nature and scope of

subsection 309(g)'s preclusiveness.”); Steven Russo, States, Citizens, and

the Clean Water Act: State Administrative Enforcement and the Diligent

Prosecution Defense, 4 N.Y.U. Envtl. L. J. 211, 232 (1995) (“The

requirement that state enforcement be pursuant to a law that is ‘compara-

ble’ to section 309(g) has also led to * * * wildly inconsistent application

of [the] bar.”).

25

Here, Smithfield plainly lacked notice that—in EPA’s

view— it was violating the CWA. The phosphorous standard

that Smithfield was penalized for allegedly violating is a state

limit not required by federal law. The Board and Smithfield

agreed to a plan that relieved Smithfield from meeting that

state limit while the connecting pipeline to HRSD was being

constructed, in exchange for Smithfield’s withdrawal of its

legal challenges to the limit. EPA received notice of the

agreement and raised no objection. Smithfield subsequently

sought and received assurances from the Board that it would

be in compliance with the phosphorous and other state limits

so long as it connected to HRSD within the requisite time-

frame and that it need not meet those limits during the

interim. EPA received notice of these assurances and once

again remained silent. EPA also undertook a close review of

the project in connection with the Commonwealth’s approval

of over $50 million in assistance from a fund largely funded

by EPA for HRSD to upgrade its facilities to implement the

1991 Special Order. Smithfield knew that EPA was aware of

its dealings with Virginia regulatory authorities, and thus had

every reason to believe that it was in compliance with the

phosphorous and other state limits. Yet despite remaining

silent and acquiescing for five years, EPA sued Smithfield

for the failing to meet the very limits the Board had assured

Smithfield it need not meet pending connection to HRSD.

The Fourth Circuit’s decision condoning EPA’s action

conflicts with numerous decisions of other circuits on the

minimum notice required in such circumstances. In General

Elec. Co. v. EPA, supra, for instance, EPA interpreted a

regulation mandating disposal of certain materials as prohib-

iting their distillation prior to disposal, and fined a company

that had engaged in pre-disposal distillation. In setting aside

the fine, the D.C. Circuit held that the company had not

received fair notice of EPA’s interpretation because two

regional offices had apparently advised that pre-disposal

26

distillation was permitted. Such “confusion” over the

meaning of the regulation was “evidence that the agency’s

interpretation of its own regulation could not possibly have

provided fair notice.” 53 F.3d at 1332.

Likewise, in Lloyd C. Lockrem, Inc. v. United States, 609

F.2d 940 (9th Cir. 1979), and Kent Nowlin Construction Co.

Vv. Occupational Safety & Health Review Commission, 593

F.2d 368 (10th Cir. 1979), federal regulators cited companies

laying sewer lines for violations relating to “trenches” and

“excavations” as those terms were used in federal regula-

tions. Noting the “disagreement among the Secretary's

compliance officers, the administrative law judge, and even

among the commissioners of the Review Commission as to

the interpretation, interrelationship and application of the

regulations involved,” 593 F.2d at 370; accord 609 F.2d at

944, the Ninth and Tenth Circuits, respectively, held that the

companies had not received fair warning that the regulations

applied to their activities. As the Tenth Circuit put it, regu-

lated entities “should not be penalized for deviation from a

standard the interpretation of which * * * cannot be agreed

upon by those who are responsible for compelling compli-

ance with it and with oversight of the procedures for its

enforcement.” 593 F.2d at 371; accord 609 F.2d at 944.

Similarly, in Diamond Roofing Co. v. Occupational Safety

& Health Review Commission, 528 F.2d 645 (Sth Cir. 1976),

the Fifth Circuit held that a group of roofing companies had

not received fair notice that a regulation requiring that

railings be placed around open-sided floors applied as well to

open-sided roofs where “there was disagreement even among

OSHA Compliance Officers as to whether [the regulation]

applied to open-sided roofs as well as floors.” /d. at 649.

Here, even though state and federal authorities clearly

disagreed over whether Smithfield was in compliance with

the state phosphorous and other limits—and Smithfield relied

27

on assurances from the primary regulating authority that it

would be in compliance by investing millions of dollars in

taking extreme corrective action—the Fourth Circuit decided

that Smithfield had fair notice that it was violating the CWA.

See App. 12a, 1Sa-16a. That ruling squarely conflicts with

the decisions of the D.C., Ninth, Tenth, and Fifth Circuits

holding that parties. lacked fair notice where authorities

differed on whether certain conduct was prohibited or

required. The lack of fair notice afforded Smithfield is

particularly intolerable given that EPA sat back and did

nothing for five years while Smithfield acted with the ap-

proval of state authorities, allowing alleged violations to pile

up before bringing suit. Cf United States v. AM General

Corp., 34 F.3d 472, 475 (7th Cir. 1994) (refusing to allow

EPA “to mount a collateral attack on a permit by bringing a

civil penalty action as many as five years after the permit had

been granted * * * by which time a defendant would have

accrued a potential liability in excess of $40 million even

though it had been operating under a permit valid on its face

and never before challenged”).

Finally, the Fourth Circuit’s decision conflicts with the

Sixth Circuit’s decision in Diebold, Inc. v. Marshall, 585

F.2d 1327 (6th Cir. 1978). There, the court held that a

manufacturer lacked fair warning that an OSHA regulation

required “guarding” of certain machines where, among other

things, “common understanding and commercial practice”

was that guarding was not required. /d. at 1336. So too here,

Smithfield acted pursuant to the “common understanding”

that a regulated entity should be able to rely on an agreement

with state authorities on the method of complying with a

state effluent limitation—particularly where federal authori-

ties have notice of that agreement. But the Fourth Circuit did

not consider that basic understanding in determining whether

Smithfield had fair notice.

28

* * *

Although the multiple conflicts engendered by the decision

below alone provide a compelling basis for review, certiorari

is particularly appropriate in view of the extraordinarily

important concerns raised by this case. The Fourth Circuit’s

decision is an affront both to the principles of federalism and

comity embodied in the CWA and to notions of fundamental

fairness embodied in the notice requirement of the Due

Process Clause. As evidenced by the numerous amici who

participated in the proceedings below,'4 the decision has vast

implications for regulated entities, which—having invested

billions of dollars in compliance efforts—now potentially

face “duplicative and inconsistent enforcement” actions such

as those to which Smithfield was subjected.'5 This Court

should grant certiorari to preserve the delicate balance of

power Congress so carefully sought to maintain in the CWA,

and to ensure that parties are treated fairly—and afforded

adequate notice of whose word controls—in those circum-

stances when federal and state authorities collide.

'4 The following associations and their members filed briefs below in

support of Smithfield’s position: American Automobile Manufacturers

Association; American Meat Institute; American Petroleum Institute;

Independent Petroleum Association of America; Integrated Waste

Services Association; National Association of Manufacturers; Michigan

Chamber of Commerce; Pennsylvania Chamber of Business & Industry;

and Colorado Association of Commerce and Industry.

15 Br. Amici Curiae of the American Automobile Manufacturers

Association, ef al., at 3.

29

CONCLUSION

For the foregoing reasons, the petition for a writ of certio-

rari should be granted.

MICHAEL H. COLE

CHARLES T. GRIFFITH

SMITHFIELD Foops, INC.

200 Commerce Street

Smithfield, Virginia 23430

(757) 365-3030

* Counsel of Record

Respectfully submitted,

PATRICK M. RAHER

JOHN G. ROBERTS, JR.*

JAMES T. BANKS

GREGORY G. GARRE

LORANE F. HEBERT

HOGAN & HARTSON L.L.P.

555 Thirteenth Street, N.W.

Washington, D.C. 20004

(202) 637-5810

Counsel for Petitioners