Summary of a Recent
Judicial Development in
The Clean Water Act

CWA Jurisdiction Must Be
Determined by Evidence at Trial

Randal Busby
National AgLaw Center Research Assistant

In an action brought by environmental groups against hog farms for alleged violations of the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251-1387, the United States Court of Appeals for the Fourth Circuit has ruled that the district court's denial of the hog farms' motion for reconsideration of standing constituted an abuse of discretion. American Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 509 (4th Cir. 2003). The court affirmed, however, that the environmental groups had standing to sue. See id. at 509. The court also vacated the final judgment entered below and remanded the issue of CWA jurisdiction for trial as a matter of correct procedure. See id.

The environmental groups, the American Canoe Association, Inc., the Professional Paddlesports Association, and the Conservation Council of North Carolina, Inc. (collectively "ACA"), joined to file a suit against certain hog farms for discharging swine waste into waters of the United States without a National Pollution Discharge Elimination System ("NPDES") permit. See id. at 509-10. The defendants, D.M. Farms of Rose Hill, L.L.C. and Murphy Farms, Inc., (collectively, the "Farms") jointly operated the five hog farms that were alleged to have discharged waste into Six Runs Creek that flows into the Black River and the Cape Fear River in North Carolina. See id. at 509-10.

Originally, the Farms used a waste management system in which the swine waste was flushed from barns into lagoons where it collected with rainfall. See id at 509. The accumulation was eventually pumped out and sprayed onto fields as fertilizer. See id. The Farms operated under a North Carolina waste plan that prohibited animal waste disposal to surface waters. See id. Since they were regulated by a state waste plan, they had never applied for a NPDES permit. See id. Both parties stipulated that in the past the Farms had made two unauthorized discharges into waters as a result of runoff from fertilizing the fields. See id. at 510.

After years of litigation, the parties eventually entered into a consent decree. See id. at 509. ACA's acceptance of the consent decree was dependent upon their success on two motions that were pending at that time. See id. The first was a Motion for Reconsideration of Declaratory Judgment on Standing, in which the Farms wanted the court to reverse an earlier declaratory judgment that the ACA had standing to bring its action because they had discovered new evidence. See id. at 511. The second motion was for Summary Judgment against the Farms based on the Gwaltney test, which is discussed below. See id. (citing Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, Inc., 484 U.S. 49 (1987); Chesapeake Bay Foundation, Inc. v. Gwaltney of Smithfield, Ltd., 844 F.2d 170 (4th Cir. 1988)). The district court ruled in favor of the ACA on both motions, and the Farms appealed to the Fourth Circuit. See id. at 509.

First, the court examined de novo what was properly before the court on appeal under the terms of the parties' consent decree. See id. at 512 (citing Kenny v. Quigg, 820 F.2d 665, 670 (4th Cir. 1987)). It determined that

[t]he Farms' agreement that it "shall not reassert standing of Gwaltney as a defense to Citizen Plaintiffs' claims after final adjudication of Defendants' Standing and Gwaltney Motions" might be read as precluding the Farms from seeking a trial on the Gwaltney issue in the event that they lost on their summary judgment motion. However, we think the better interpretation, given the district court's characterization of both motions as motions for reconsideration, is simply that the Farms agreed not to file additional motions for reconsideration after final adjudication on the merits.

Id. at 513.

Next, the court considered whether the district court properly denied the Farms' motion for reconsideration of its previous standing judgment. See id. ACA argued that there was no abuse of discretion by the district court and that the Farms had not shown "'(1) an intervening change in controlling law; (2) the discovery of new evidence not previously available, and (3) the need to correct clear or manifest error in law or fact, to prevent manifest injustice'" in order to prevail. Id. at 513-14 (citation omitted). The Farms argued that the issue should be reviewed de novo and all relevant evidence, including any new, should be allowed. See id. at 514.

The court found that the district court had abused its discretion in denying the Farms' reconsideration request because the original labeling of the motion as "declaratory" was a misnomer. See id. at 516. It stated that based on its contents and substance, the district court should have properly titled the motion as a "Motion for Partial Summary Judgment." See id. at 514. The court explained that "[u]nlike a true declaratory judgment, an order of partial summary judgment is interlocutory in nature." Id. (citing Fed.R.Civ.P. 59(e) and 60(b)). The court further explained that a district court maintains "the power to reconsider and modify its interlocutory judgments, including partial summary judgments, at any time prior to final judgment when such is warranted." Id. (citations omitted).

The court stated that the main goal of all courts should be to reach the "correct judgment under the law." Id. at 515. It also stated that a challenge to subject matter jurisdiction is never waived, and it can be raised on appeal. See id. (citations omitted). It stated that

[t]he district court's decision on the issue was also rendered early in the litigation, before there had been much factual development, discovery, or opportunity for the defendants to consult experts. While a ruling on the standing issue at that time may have served beneficial purposes, such as isolating the real issues in the case and allowing the preclusive effect of a decision rendered after full trial, or even a decision rendered after full discovery. Against whatever finality interest would inure to such a ruling is tacked the paramount importance of achieving a correct judgment on the Article III standing. In this case, the defendants presented evidence going to the standing issue that had not been previously considered by the district court.

Id. at 516. The new evidence provided "exceptional circumstances justifying reconsideration" and rendered "the district court's denial of such an abuse of discretion." Id. (citation omitted).

Although the district court erred, the court refused to remand the issue because the district court's initial judgment on the standing was correct. See id. at 516-17. The court set forth the standing requirements for ACA as follows:

An association has standing to sue on behalf of its members when "(a) its members would otherwise have standing to sue in their own right (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit."

Id. at 517 (quoting Hunt v. Washington State Apple Advertising Com'n, 432 U.S. 333, 343 (1977)). ACA claimed that they represented members who had used the waters at issue. See id. The Farms challenged the first requirement, asserting that the ACA members did not have standing in their own right to bring suit. See id.

The court explained that the three-prong test used to determine whether an individual has standing to bring suit is "(1) injury in fact, (2) traceability, and (3) redressability." Id. (citations omitted). The Farms asserted that the ACA had failed to demonstrate the first two prongs of this test. See id.

First, the court determined that a "threatened injury is sufficient to provide injury in fact." Id. at 518. Although there was no evidence of actual harm to the waterway, "fear was reasonable because the defendant[s were] placing chemicals [hog wastes] into the waters that could have adverse health and environmental effects." Id. (citation omitted). Thus, ACA had demonstrated injury in fact. See id.

Second, the court stated that the ACA had submitted affidavits by several members and expert testimony at the trial level. See id. The Farms argued that "none of the hog waste from the two pre-suit discharges adversely impacted the environment in an area where the plaintiffs' members were." Id. at 519. The Farms' experts stated that the discharges could not have extended very far up Six Runs Creek, and there were no long term effects on either Six Runs Creek or the Black River. See id. The Farms went on to argue that "[w]ith respect to traceability . . . other upstream animal farms were likely responsible for whatever injuries, if any at all, the plaintiff's members suffered." Id.

The court rejected the Farms' arguments and stated that injury in fact was indeed established "because they [the plaintiffs] have alleged harm to their recreational, aesthetic, and commercial interest and they were within the area of contamination around the time of the discharges." Id. at 520. The court also stated that

[t]he fact that other farms may have contributed to the pollution problems complained of by the affiants in this case does not negate the fact that the defendants' discharges still potentially harmed them. It would be strange indeed if polluters were protected from suit simply by virtue that others were also engaging in the illegal activity.

Id. The court affirmed the district court's judgment because the Farms' new evidence did not merit reconsideration. See id.

The court next addressed CWA jurisdiction. The court evaluated whether the ACA had fully demonstrated the requirements on standing in § 505(a) of the CWA, 33 U.S.C. § 1365(a), "as interpreted by the Supreme Court and this Circuit in Gwaltney I and Gwaltney II, respectively." Id. (citing Gwaltney I, 484 U.S. 49; Gwaltney II, 844 F.2d 170). According to the test developed from both cases, "a citizen-plaintiff seeking to sue under § 505(a) of the CWA must show that the defendant's violations of the CWA are ongoing at the time of suit." See id. The court stated that the second element of the test was that

at trial, a plaintiff may satisfy his burden "either (1) by proving violations that continue on or after the date the complaint is filed, or (2) by adducing evidence from which a reasonable trier of fact could find a continuing likelihood of a recurrence in intermittent or sporadic violations." It is that final step-actual proof at trial-that is missing from this case.

Id. (quoting Gwaltney II, 844 F.2d at 171-72).

The court determined that the district court had only "stated that CWA jurisdiction existed, implicitly determining that the plaintiffs had satisfied their burden under Gwaltney II." Id. at 522. The court stated that it did not appear in the record that the district court had ever held a trial on the issue, and "its assertion of jurisdiction in its final judgment [was] not accompanied by any findings of fact as required by Federal Rule of Civil Procedure 52(a)." Id. (citing Fed.R.Civ.P.52(a)). The court ruled that

[s]uch a judgment rendered without a trial and based on no discernable factual findings, was erroneous. While the Farms may not ultimately prevail on their Gwaltney challenge, they are entitled to present their case on that issue at trial, at which point ACA will have to come forward with evidence, rather than mere allegations, in order to prevail on the issue.

Id.

The case was decided on April 16, 2003; this summary was posted August, 2003