California Commercial Litigation and Business Counseling Law Firm
Specialized in Proposition 65

By William Funderburk and Ruben Castellon

© Copyright 1998 Daily Journal Corp. Reprinted with Permission.

William Funderburk and Ruben Castellon are partners with the San Francisco office of Radcliff, Frandsen & Dongell.

The U.S. Supreme Court recently issued a ruling that will have far-reaching consequences. In Steel Co. v Citizens for a Better Environment, 118 S.Ct. 1003 (1998), a 6-3 majority held that a complaint brought under the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq., should be dismissed because the plaintiff failed to meet the redressability requirements established for Article III, Section 2 standing under the US Constitution.

The proliferation of lawsuits under state and federal private attorney-general statutes, commonly known as citizen suits or, more pejoratively, "bounty hunter" suits, has focused attention on the opinion in Steel. The case may render future EPCRA citizen suits meaningless; its impact on other environmental statutes, however, is presently difficult to predict.

The plaintiff, Citizens for a Better Environment, served a 60-day notice of intent to sue on Steel Co., a steel manufacturer in Illinois. The notice alleged that Steel had failed to meet the EPCRA reporting requirements. The statute requires, among other things, that certain industries file annual toxic-release inventory forms. The prerequisite to filing a lawsuit is that a plaintiff must give a 60-day notice to various government agencies and the contemplated defendant.

Prior to the expiration of the 60-day notice period, Steel finally filed the overdue forms with the Environmental Protection Agency for the first time. No government agencies elected to bring an action and the 60-day period expired.

CBE, nevertheless, filed suit in the US District Court for the Northern District of Illinois alleging, among other things, that the defendant failed to meet EPCRA's filing deadlines. The District Court dismissed the complaint. CBE appealed the dismissal. The 7th US Circuit Court of Appeals reversed the District Court's decision and remanded. Citizens for a Better Environment v. Steel Co., 90 F.3d 1237 (1996). Steel filed a petition for writ of certiorari, which was granted.

The Supreme Court held that the question of Article III, Section 2 constitutional standing must be decided prior to deciding statutory jurisdiction. In dismissing the suit, the court held that the plaintiff failed to satisfy the redressability requirement for constitutional standing.

The facts of Steel are really not that unusual. When faced with a 60-day notice of intent to sue, whether under state or federal environmental law, most practitioners advise clients to focus immediately on compliance. Where lack of compliance is clear and not defensible, companies are typically advised, working with the appropriate engineering and technical experts, to rectify compliance deficiencies.

At minimum, the client is positioned to negotiate a more favorable settlement with the citizen group or agency exercising the discretionary prosecutorial function. At best, rectifying past violations can form the foundation for a later motion to dismiss or motion for summary judgment on grounds that the alleged violations were "wholly past." See, e.g., Gwaltney of Smithfield Ltd. v. Chesapeake Bay Foundation Inc., 484 US 49 (1987) (holding citizen-suit provision of the Clean Water Act, 33 U.S.C. Section 1365(a), does not allow suits for wholly past violations).

After Steel, practitioners advising EPCRA citizen-suit defendants must counsel clients to file any overdue forms immediately if they are to raise a defense based on lack of standing.

US Constitution, Article Ill, Section 2 empowers federal courts to hear any "case or controversy." Courts apply a three-prong test to decide standing. First, a plaintiff must have suffered some "injury-in-fact." Second, the conduct complained of must be the cause of the injury. Third, the relief requested must provide redress to the plaintiff's alleged injuries. See Lujan v. Defenders of Wildlife, 504 US 555 (1992).

Assuming that the first two prongs exist, Steel held that "[n]one of the specific items of relief sought, and none that we can envision as 'appropriate' under the general request [for relief], would serve to reimburse respondent for losses caused by the late reporting or to eliminate any effects of that late reporting upon respondent."

Significantly, the court did not view civil penalties authorized by statute as redress because they are payable to the US Treasury and not the plaintiff. In addition, "investigation and prosecution costs" were held not sufficient in that "the litigation must give the plaintiff some other benefit besides reimbursement of costs that are a byproduct of the litigation itself."

Finally, the court deemed the remaining relief-- requested authority to inspect Steel's facility and an order compelling Steel to provide CBE copies of its EPA compliance report--to be "injunctive in nature" and could not "conceivably remedy any past wrong but is aimed at deterring [Steel] from violating EPCRA in the future."

Before Steel, citizen groups in some circuits could sue for wholly past violations. At minimum, Steel now provides the defense bar with another argument in defending EPCRA citizen suits. At best, it provides a lack-of-standing defense in other citizen-action lawsuits. The court also leaves a narrow opening to plaintiffs, in dicta, by noting, "if respondent had alleged a continuing violation or the imminence of a future violation," the relief requested would have satisfied the redressability requirement. Thus, EPCRA citizen plaintiffs should consider alleging facts showing the "imminence of a future violation" if there is a good-faith basis to do so.

Yet plaintiffs pursuing actions under EPCRA must still overcome an issue that at least three justices have already decided: EPCRA does not confer citizen suits jurisdiction concerning wholly past violations. (Three justices concurred in the result, but on different grounds--that the violations were wholly past.)

Whether EPCRA citizen suits abruptly disappear, or whether this case will simply result in more creative pleading by plaintiffs, remains to be seen. Alternatively, plaintiffs may shy away from filing EPCRA lawsuits and focus on other statutes, such as the Clean Air Act Amendments of 1990 (jurisdiction for past violations if the violations have been repeated). The statute may achieve a similar result and still provide for recovery of attorney fees. The persuasiveness of making a "standing" defense in cases other than EPCRA actions remains unclear and is not likely to discourage citizen organizations from filing lawsuits.

All materials copyright 1999-2014 by Castellon & Funderburk LLP. All rights reserved.


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