Volume 32 Number 27  Friday, July 6, 2001	Page 1349
ISSN 1521-9410
Analysis & Perspective
Enforcement High Court Rejects 'Catalyst' Theory: Momentum Shifts to Citizen Suit Defendants By James D. Brusslan

James D. Brusslan is an environmental lawyer with a national practice based in Chicago. The opinions expressed here do not represent those of BNA, which welcomes other points of view.

In the last three years, the Supreme Court has decided three important cases relating to citizen enforcement of environmental laws. In the first case, The Steel Company v. Citizens for a Better Environment, 523 U.S. 83, 46 ERC 1097 (1998), the court curtailed citizen enforcement. It prevented citizens from bringing an action concerning environmental violations that ceased prior to the date the suit was filed.

Less than two years later, the court revitalized citizen suits in Friends of the Earth Inc. v. Laidlaw Environmental Services (TOC) Inc., 528 U.S. 167, 49 ERC 1769 (2000). The court eased the necessary showing of "injury" for standing to sue, and authorized citizens, in many cases, to pursue actions if the defendant achieved compliance even after a complaint was filed.

On May 29, the court swung the pendulum back to defendants. Buckhannon was not an environmental case, but was brought under the Federal Housing Amendments Act and American Disabilities Act, both of which have citizen suit provisions similar to those in environmental laws. In a 5-4 decision, the court narrowed the term "prevailing party." It held that a citizen is not a "prevailing party" and may not recover its attorneys' fees, unless the citizen either obtains a judgment on the merits or enters into a court-approved consent decree.

The court rejected the well-accepted catalyst theory, under which a private plaintiff could obtain attorneys' fees if its suit spurred the defendant to take at least some of the measures sought in the complaint. Environmental citizen groups often rely on the award of attorneys' fees as a major incentive in filing their actions. Buckhannon diminishes the prospect of recovering such fees. The case will have a chilling effect on the filing of citizen suits and will likely reduce both corporate and government compliance with environmental laws. Buckhannon and the two previous major Supreme Court decisions, and their implications, are discussed below.

 
In 1998, the Supreme Court reversed a decision holding that a citizen group could sue a defendant that, for seven years, had violated the Emergency Planning and Community Right-to-Know Act, 42 USC §§ 11001 et seq. EPCRA requires certain industries to submit annual reports showing their toxic releases and the location of their toxic chemicals. The plaintiff conducted research and discovered the defendant had never filed annual EPCRA reports showing their releases. In accordance with EPCRA's citizen suit provision, the plaintiff notified the defendant that it intended to sue within 60 days. During the 60-day period, the defendant filed its late reports. The plaintiff sued, seeking penalties (payable to the United States) for the violations, along with its attorney fees and costs incurred in uncovering the violations. Relying on the statutory language, the appellate court held the plaintiff could proceed.
The Supreme Court reversed. It held that Article III of the Constitution, which defines the extent of federal court jurisdiction, prevented suit. According to the court, the defendant had redressed the plaintiff's injury--the lack of information about the defendant's toxic releases--by filing its reports before the plaintiff sued. The decision allowed the defendant to avoid all penalties for its violations and prevented the plaintiff from recovering its attorneys' fees.
 
 
 

In Laidlaw, unlike The Steel Company, the defendant's violations continued even after the citizen group filed its complaint. At trial, the lower court ruled the defendant had violated the Clean Water Act, 33 USC §§1251 et seq., and ordered the defendant to pay over $400,000 in penalties to the United States. The court found it unnecessary to order the defendant to comply with the law.
By trial, four years after the plaintiff filed its complaint, the defendant had come into compliance. The appellate court dismissed the case entirely, relying on a broad interpretation of The Steel Company case. Focusing on the lower court's decision not to order the defendant to comply with the law, it ruled that the case was moot. The appellate court added that a civil penalty payable to the government would not redress plaintiff's harm.

This time, the Supreme Court reversed. It held that if the defendant's violations continue after the plaintiff files its complaint, the court may dismiss the case as moot only under rare circumstances.

The defendant must establish that it is absolutely clear the allegedly wrongful behavior could not be reasonably expected to recur. The high court disagreed with the appellate court and held that civil penalties do redress plaintiff's harm, as they deter defendants from future violations. The Supreme Court returned the case to the lower court to decide if the case was moot. The high court left open the possibility, even if the case was moot, that the defendant must still pay the civil penalty ordered by the lower court, along with the plaintiff's attorneys' fees.
 
 
 

As in Laidlaw, in Buckhannon the defendant's violations continued after the plaintiff filed the complaint. Buckhannon differed from Laidlaw in that the lower court never ruled the defendant broke the law. Also, in Buckhannon, the case was clearly moot. These differences altered the outcome in favor of the defendants.
Buckhannon was an action for injunctive relief under the Fair Housing Amendments Act of 1988 (FHAA), 42 USC § 3601 et seq. and the Americans With Disabilities Act of 1990 (ADA), 42 USC § 12101 et seq. These laws, as with environmental statutes, authorize the court to award attorney fees to the "prevailing party," 42 USC §§3613(c), 12205. Given the court's focus on the term prevailing party, it may be difficult for environmental citizen suit plaintiffs to distinguish the Buckhannon decision.

The plaintiff in Buckhannon operates care homes that provide assisted living to its residents. It sued the State of West Virginia, claiming that state law requiring plaintiff's residents to be capable of moving themselves from imminent danger (referred to as "self preservation") violated the FHAA and ADA. The plaintiff asked the court to invalidate the state law and award attorney fees. Rather than continue the litigation, before judgment, the West Virginia Legislature voluntarily amended the law to remove the "self preservation" requirement and to conform with the FHAA and ADA. The new state law made it absolutely clear that the allegedly wrongful behavior could not be reasonably expected to recur. The lower court dismissed the case as moot. The plaintiff asked the court to award its attorneys' fees. It asserted that it was the "prevailing party," as its lawsuit was the catalyst for the state's statutory amendment. The lower court denied attorneys' fees, and the plaintiff appealed.

The Supreme Court rejected the catalyst theory. Relying primarily on what it termed the "rather clear meaning" of the statute, it held that a plaintiff is a "prevailing party" eligible for attorney fees under narrow circumstances. A court must enter a judgment on the merits or approve a settlement enforced through a consent decree awarding at least some of the relief sought in the complaint. By contrast, by its very definition, the catalyst theory allows attorneys' fees when there has been no judicially sanctioned change in the parties' legal relationship. As the catalyst theory does not meet the standard set forth by the court, the plaintiff could not recover its fees.
 
 
 

Buckhannon and the end of the catalyst theory provides defendants with a sharp tool to avoid paying attorney fees to citizens who have filed meritorious claims for environmental violations.
Counsel for a defendant company can attempt to employ Buckhannon to delay trial until the company complies with the law. Assume, as in Laidlaw, that a defendant continues to violate the Clean Water Act after the complaint is filed. Any time before trial, which may take years, the defendant can move the court to dismiss the case as moot. It can attach to the motion an affidavit from an engineer stating that a new pollution control device or procedure makes it absolutely clear that the alleged Clean Water Act violations could not be reasonably expected to recur.

If the court adopts the defendant's position, under Laidlaw, it will dismiss the action as moot. As there has been no judgment or settlement between the parties, the plaintiff may not, under Buckhannon, be authorized to obtain its attorneys' fees. The defendant will have successfully avoided attorneys' fees, exhausted plaintiff's resources, and complied at a leisurely pace. Citizen groups that depend on attorneys' fees awards will be reluctant to sue, knowing defendants may employ these delay tactics.

Perhaps more significantly, the demise of the catalyst theory has a chilling effect on citizen suits against the government. Environmental groups often sue the EPA for failure to timely issue regulations or to act on permit applications.

Before Buckhannon, these groups were almost assured of recovering their attorneys' fees. If EPA failed to take action and the matter went to trial, the groups would prevail, as the agency clearly was violating the law. Similarly, if, in response to the suit, EPA voluntarily issued the overdue regulations or ruled on the permit applications, the groups could successfully petition the court for fees under the catalyst theory.

After Buckhannon, the likelihood of citizens securing attorneys' fees diminishes. EPA can seek to avoid paying attorneys' fees by taking the legally required action before a final judgment, which may render the case moot. With a significantly lower prospect of recovering these fees, the number of environmental suits against the government is bound to decrease.
 
 
 

The three opinions clarify these issues.
1. Under The Steel Company, a citizen may not sue a defendant under current environmental statutes for violations that occurred solely before the complaint was filed.

2. Under Laidlaw, unless a case is moot, a citizen may sue a defendant for violations that have occurred after the complaint has been filed.

3. Under Buckhannon, even if violations continue after the complaint was filed, if a case becomes moot before the court finds a violation, the defendant is not entitled to its attorney fees.

The following issues remain open.

1. What facts in an environmental action must defendants present to show that a case is moot? In other words, in an environmental case, when is it absolutely clear that the violations could not be reasonably expected to occur?

2. If a case becomes moot after the trial court finds an environmental violation, can plaintiffs still secure a judgment for civil penalties and attorneys' fees for prosecuting the action before the case became moot?

Given the court's recent interest in citizen suits, the court may address these open issues in the next few years. It remains to be seen if the court will swing the pendulum back to citizens or continue to rule for defendants.
 
 

Legislative Solutions
The Supreme Court rejected the catalyst theory in Buckhannon based on its narrow interpretation of the statutory term "prevailing party." As a result, Congress may easily restore the catalyst theory by amending environmental citizen suit provisions.
For instance, Congress can define "prevailing party" to include a plaintiff who sues and achieves all or some of the relief sought in the complaint, whether by judicial order, consent decree, voluntary change in the defendant's conduct or otherwise. The plaintiff would have to show some nexus between its lawsuit and defendant's changed conduct. This amended definition would likely withstand constitutional scrutiny and place citizen plaintiffs in the position they were in before Buckhannon.

Studies show that Americans place a high priority on the environment. Citizens often seek to play a meaningful role in improving the quality of their communities. To reflect the views of their constituents, increase compliance with environmental laws, and allow citizen suits to proceed, Congress can amend the definition of "prevailing party" to assure that successful citizens will recover their attorney fees.
 

 
 

Copyright © 2001 by The Bureau of National Affairs, Inc., Washington D.C.