U.S. v. ITT Rayonier, Inc., 77-3672

• Citation: 627 F.2d 996
• Decision Date: 15 September 1980
• Docket Number: No. 77-3672,77-3672
• Parties: , 10 Envtl. L. Rep. 20,945 UNITED STATES of America, Plaintiff-Appellee, v. ITT RAYONIER, INCORPORATED, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 996

627 F.2d 996

16 ERC 1091, 10 Envtl. L. Rep. 20,945

UNITED STATES of America, Plaintiff-Appellee, v. ITT RAYONIER, INCORPORATED, Defendant-Appellant.

No. 77-3672.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 5, 1980.

Decided Sept. 15, 1980.

Thomas H. Truitt, Washington, D. C., for defendant-appellant.

James Moore, Asst. U. S. Atty., Seattle, Wash., argued for plaintiff-appellee; John C. Merkel, U. S. Atty., Seattle, Wash., on brief.

Appeal from the United States District Court for the Western District of Washington.

Before WRIGHT, SKOPIL, and SCHROEDER, Circuit Judges.

EUGENE A. WRIGHT, Circuit Judge:

This case involves government delay in promulgating water pollution guidelines and industry delay in implementing pollution control technology. Each party asserts that its delay was justified and did not excuse the other's lack of diligence.

Specifically, the federal Environmental Protection Agency (EPA) and ITT Rayonier (Rayonier) dispute the meaning of a footnote attached to the discharge permit for Rayonier's pulp mill in Port Angeles, Washington, on the Straits of Juan de Fuca. Because this precise issue was previously litigated in state courts and determined favorably to Rayonier, we find the EPA collaterally estopped from asserting a contrary position in this enforcement action in federal court.

BACKGROUND

In 1972 Congress established the National Pollutant Discharge Elimination System (NPDES) under § 402 of the Federal Water Pollution Control Act (FWPCA). 33 U.S.C. § 1342. Under this system state agencies, pursuant to an approved state program, may issue water pollution discharge permits. In November 1973, the EPA approved Washington's permit program and transferred permit-issuing authority to the Washington Department of Ecology (DOE). See 39 Fed.Reg. 26,061 (1974).

FWPCA authorized issuance of NPDES permits designed to achieve compliance by July 1, 1977, with regulations (effluent limitations) defining "best practicable control technology" (BPT). 33 U.S.C. § 1311(b)(1)(A). ¹ The EPA was to establish BPT effluent limitations for the pulp industry by October 1973. 33 U.S.C. § 1314(b).

RAYONIER'S PERMIT

In the summer of 1973 and early in 1974, Rayonier and DOE negotiated the terms of an NPDES permit. Because the EPA had not yet established effluent limitations, the parties incorporated discharge limitations from prior legislation. ² Contemplating imminent promulgation of guidelines, the parties included footnote f in that section of the permit containing numerical discharge standards for various pollutants:

The biochemical oxygen demand, suspended solids, and pH limitations will be modified to be consistent with the applicable final effluent guidelines when promulgated by the EPA in the Federal Register, or as thereafter modified by final action consequent upon any appeal from such guidelines.

A separate section of the permit set forth the compliance schedule for attaining the permit standards. DOE issued the permit in August 1974 and the EPA did not exercise its veto authority. See 33 U.S.C. § 1342(d)(2).

Disputes arose as to the adequacy of Rayonier's implementation plans. In November 1975, the EPA advised DOE that, if it did not take action, Rayonier would be a "candidate" for federal enforcement. Doe issued a compliance order in December 1975 which Rayonier appealed to the state Pollution Control Hearings Board.

In February 1976, more than two years after its statutory deadline, the EPA promulgated effluent limitations for pulp mills. ³ Rayonier and other pulp firms immediately challenged those standards in federal court. ⁴ In its July 1976 hearing before the state pollution control hearings board, Rayonier contended footnote f extended its compliance schedule pending final judicial approval of the EPA's proposed effluent guidelines. The board disagreed, denied a stay pending judicial review, and ordered Rayonier to meet its permit compliance schedule. This order was stayed pending Rayonier's appeal to state superior court.

In March 1977, the EPA issued a notice of violation to Rayonier and DOE pursuant to 33 U.S.C. § 1319(a)(1). Three weeks later the state court reversed the hearings board, finding footnote f excused compliance pending judicial approval of final effluent limitations. DOE appealed to the state supreme court, notifying the EPA that it was effectively prevented from further enforcement. In April 1977, the EPA filed its own enforcement action in federal court under 33 U.S.C. § 1319(b), seeking injunctive relief and civil penalties. The July 1, 1977, statutory deadline for attaining best practicable control technology passed with the parties at an impasse.

In October 1977, the district court granted the EPA's motion for summary judgment on the injunctive phase of the case and ordered immediate compliance with the permit. The court found footnote f to be an unambiguous declaration pertaining only to substitution of standards and not to modification of the compliance schedule.

Pending appeal of the district court's injunction order, several significant events have transpired. First, the D.C. Circuit upheld the BPT effluent limitations for the pulp industry with one relevant exception. Weyerhaeuser Co. v. Costle, 590 F.2d 1011 (D.C.Cir.1978). ⁵ Second, the Washington Supreme Court affirmed Rayonier's position in the state court suit. ITT Rayonier, Inc. v. Department of Ecology, 91 Wash.2d 682, 586 P.2d 1155, 593 P.2d 1308 (1978). The court examined the "logical application" of footnote f and found:

The importance of final standards prior to (the expenditure of funds) establishes the natural interdependence of the standards . . . and the compliance schedule . . . .

91 Wash.2d at 690, 586 P.2d at 1160.

Finally, pursuant to the district court's compliance order, Rayonier has installed pollution control equipment provisionally satisfactory to the EPA. Despite Rayonier's compliance, the appeal is not moot because the district court has determined liability and retained jurisdiction to ascertain civil penalties under 33 U.S.C. § 1319(d). See, e. g., Planned Parenthood of Minn., Inc. v. Citizens for Comm. Action, 558 F.2d 861, 865 (8th Cir. 1977); E. P. Hinkel & Co. v. Manhattan Co., 506 F.2d 201, 204 (D.C.Cir.1974). Cf. Trans Intern. Airlines v. Intern. Brotherhood, No. 77-3362 (9th Cir., February 14, 1980) (appeal of injunctive order not moot because resolution crucial to deciding pending damages claim).

As a threshold matter, Rayonier asserts the judgment in the state enforcement action operates to preclude the EPA's action. It also contends the EPA is barred from bringing the instant action under the doctrines of election of remedies and unclean hands. If these arguments are unavailing, Rayonier urges this court to construe footnote f as modifying its compliance schedule. Because we find the EPA collaterally estopped from disputing the meaning of footnote f, we need not address remaining issues.

RES JUDICATA/COLLATERAL ESTOPPEL

The district court held, as a matter of law, no privity exists between DOE and EPA for enforcement purposes. For this proposition, the court relied exclusively upon 33 U.S.C. § 1342(i), which provides:

Nothing in this section (pertaining to NPDES) shall be construed to limit the authority of the (EPA) Administrator to take (enforcement) action . . . .

Under the doctrine of res judicata, "a final judgment on the merits bars further claims by parties or their privies based on the same cause of action." Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 973, 59 L.Ed.2d 210 (1979). Under collateral estoppel principles, once an issue is actually litigated and necessarily determined, that determination is conclusive in subsequent suits based on a different cause of action but involving a party or privy to the prior litigation. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 649 n. 5, 58 L.Ed.2d 552 (1979). The purposes of these judicially created rules are to conserve judicial resources, protect litigants from multiple lawsuits, and foster certainty and reliance in legal relations. See Montana v. United States, 440 U.S. at 153-54, 99 S.Ct. at 973-974; Hooker v. Klein, 573 F.2d 1360, 1368 (9th Cir.), cert. denied, 439 U.S. 932, 99 S.Ct. 323, 58 L.Ed.2d 327 (1978).

In the absence of "countervailing statutory policy," collateral estoppel bars relitigation of factual questions or mixed questions of law and fact. See Brown v. Felsen, 442 U.S. 127, 139, n. 10, 99 S.Ct. 2205, 2213, n. 10, 60 L.Ed.2d 767 (1979). We look to the statutory language and history of FWPCA to determine if it creates a "special circumstance" warranting an exception to the normal rules of preclusion. See Montana v. United States, 440 U.S. at 155, 99 S.Ct. at 974-975.

1. FWPCA and Collateral Estoppel

Section 1342(i) preserves federal enforcement authority despite state permit-issuing power. It is included in that section of FWPCA implementing the NPDES permit program. The legislative history of FWPCA is replete with references to "dual" or "concurrent" enforcement authority. ⁶ The act has been said to create a "delicate partnership" between state and federal agencies. Save the Bay, Inc. v. EPA, 556 F.2d 1282, 1284 (5th Cir. 1977).

The existence of concurrent enforcement powers does not per se negate the application of res judicata principles. See Ma Chuck Moon v. Dulles, 237 F.2d 241, 243 (9th Cir. 1956), cert. denied, 352 U.S. 1002, 77 S.Ct. 559, 1 L.Ed.2d 547 (1957).

Section 1342(i) reserves EPA's authority to bring an enforcement action notwithstanding an approved state permit system with concomitant enforcement powers. Enforcement actions could have been filed concurrently in both state and federal courts. See 33 U.S.C. § 1319(b) (federal); 33 U.S.C. § 1342(b)(7) (state). This does not necessarily preclude the operation of collateral estoppel after one action reaches finality.

Although no court has directly...