By Nathalie Camarena, Esq. and Rebecca Andrews, Esq.
The U.S. District Court for Massachusetts recently determined that citizen suits are not available for administrative violations of the federal Clean Water Act for failure to properly transfer a permit to a new owner in certain circumstances. [The Blackstone Headwaters Coalition, Inc. v. Gallo Builders, Inc., ___F.Supp.3d___, Case No. 4:16-cv-40053 (D. Mass. Sep. 30, 2019).]
Background
Plaintiff, Blackstone Headwaters Coalition (Blackstone) brought this action under the citizen suit provision of the federal Clean Water Act (CWA). The Clean Water Act requires “operators” of construction activities that “will disturb one or more acres of land, or will disturb less than one acre but are part of a common plan of development … that will disturb more than one acres of land,” to obtain a Construction General Permit (Permit) from the U.S. Environmental Protection Agency (EPA) authorized by the National Pollutant Discharge Elimination System (NPDES).
The Permit allows operators to discharge pollutants in accordance with set limitations and conditions. An “operator” is defined as either: 1) a party with “operational control over construction plans and specifications, including the ability to make modifications to those plans and specifications,” or 2) a party with “day-to-day operational control of those activities at a project that are necessary to ensure compliance with the [Permit] conditions.”
The site at issue was acquired by father and son Robert H. Gallo and Steven A. Gallo (Gallos) through several transactions conducted between 1995 and 2005. In 2005, the Gallos consolidated ownership of the site under their company—Fox Hill Builders, Inc. In 2007, the site was conveyed to Arboretum Village, LLC where the Gallos serve as members. In February 2006, Gallo Builders, Inc. (GBI) owned by the Gallos, obtained a Permit for the site and listed GBI as the operator of the site. In May 2012, the EPA revamped the Permit process to require permit holders to re-apply. GBI elected to allow its Permit to lapse and reapplied for it to be held by Arboretum. A Permit was issued to Arboretum in May of 2012.
The Massachusetts Department of Environmental Protection (DEP) has authority over the site under the Massachusetts Clean Water Act, Massachusetts Surface Water Quality Standards and the Massachusetts Wetlands Protection Act. These statutes and their corresponding regulations invest the DEP with enforcement powers. On June 21, 2013, the DEP issued a Unilateral Administrative Order (UAO) alleging storm water violations on the site that forced Arboretum to comply with state and regulatory authority. The matter was ultimately settled by a jointly executed Administrative Consent Order (ACOP).
The U.S. District Court’s Decision
The only remaining claim in this action was whether GBI and its owners, the Gallos (collectively referred to as: defendants), violated the CWA by failing to obtain a Permit for construction on the site. Defendants relied on similar case from the First Circuit Court of Appeals, which held that a business’ failure to properly transfer an analogous state permit to a new business was not a substantive violation of the CWA that could be the basis for a civil enforcement suit. The First Circuit Court of Appeals reasoned that because: 1) the transferor and recipient businesses were controlled by the same person; 2) the identity of the current owner of the property was known to the state permitting authority; 3) and the current owner was complying with relevant regulations, the name on the permit amounted to no more than an administrative issue.
In reviewing applicability of the First Circuit Court’s case, the U.S. District Court applied the three-step analysis to the present case. First, both the prior operator listed on the Permit and the current operator that was not listed, were owned and controlled by the same person—the Gallos. Second, there was “voluminous evidence” demonstrating the identity of the site’s owners was known to the state agencies. Third, GBI and the Gallos complied with the relevant regulations by continuing to comply with the ACOP.
In sum, the District Court held that the underlying purpose of the NPDES and the Permit provisions was met when a valid permit was issued to Arboretum. As seen in the First Circuit Court case, listing Arboretum as the permit holder did not rise to the level of a substantive violation of the CWA and could not form the basis of a civil enforcement suit. The court granted defendant’s motion for summary judgement.
Conclusion and Implications
This case holds that where the three-step analysis is met, the name on a Construction General Permit for purposes of complying with the Federal Clean Water Act may amount to no more than administrative issue. When such an issue arises, it is not sufficient basis of a civil enforcement suit under the CWA.
