A recent decision by the Third Circuit may make it easier for holders of environmental permits to defend against citizens' suits. Most federal environmental statutes contain a provision that entitles citizens' groups to sue permittees for violations of their permits if the government fails to act. In order to bring a suit, the citizens' group must prove that it has standing to sue; in other words, it must show that it or its members have a sufficient interest in the matter to prosecute the suit.
The case law regarding standing requires plaintiff organizations to demonstrate that their members have suffered, among other things, "actual injury." Cases have held that it is sufficient for plaintiffs to allege in the complaint that their members reside in the vicinity of, own property near or recreate in or near the area of defendant's discharges. Plaintiff citizen groups generally prove these allegations with affidavits of several members stating that those members live or recreate in the area and have been offended by, among other things, the smell or appearance of polluted waters, or that they do not eat the fish from the waters. At least one case also had held that only the quantity of the discharge at issue is relevant to the issue of standing, not the quality. So, even if the discharge did not cause any actual harm, if the discharge was in violation of the permit, the plaintiff might have standing.
In August of this year, the Third Circuit in PIRG v. Magnesium Elektron, Inc. ("MEI III") held that because the District Court had found that MEI's wastewater discharges, although in violation of its New Jersey Pollutant Discharge Elimination System Permit, did not cause harm to the creek into which they flowed, the plaintiffs lacked standing to sue. The Third Circuit held that because of the lack of harm to the creek, Public Interest Research Group, Inc. ("PIRG") failed to meet the "actual injury" prong of the standing test. This opinion came after eight years of discovery and litigation, during which time PIRG's standing already had been affirmed by both the District Court and the Third Circuit.
In 1992 (prior to MEI III, but in the same action), the District Court ruled that members of PIRG had standing to sue MEI because they had been injured by the excess discharges of saline and total organic compounds because, due to those discharges, they would not "swim, drink and fish in the affected waterways." This ruling was affirmed by the Third Circuit. In 1995, the District Court held a trial on the issue of penalties and adopted the findings of MEI's expert that discharges to the creek had not caused any damage to the creek and, in fact, may have improved its quality. The Court nevertheless imposed penalties in the amount of $2.6 million for failure to comply with the Permit, and thereafter ordered MEI to pay Plaintiffs' legal fees in the amount of $524,900.
MEI appealed that decision to the Third Circuit. In that appeal, the Third Circuit revisited its prior opinion on PIRG's standing and held in MEI III that, because MEI's discharges were found not to cause harm to the Creek, plaintiffs failed to establish "actual injury" and therefore were without standing to sue in the first instance. The Court thus vacated the judgment and permanent injunction against MEI that had been imposed by the District Court.
The MEI III opinion is based on what appears to be an unusual set of facts in that repeated, material permit exceedences were determined to have caused no environmental or health harm to the receiving medium. The opinion, therefore, may be distinguishable on that basis. Nevertheless, there are two ways in which a defendant in a citizens' suit might rely on MEI III to dismiss the action based on plaintiffs' lack of standing. First, one might move to dismiss an action on standing grounds at the outset of the case. Although it is not clear that a Court would entertain the presentation of technical testimony regarding the environmental and health effects of the discharge at such an early stage of the case, after MEI III, it seems more likely that courts in the future will consider allowing this sort of "mini-trial" at the outset as necessary for the adjudication of a standing motion. Second, as in MEI III, a defendant could bring a standing motion following trial, assuming that it establishes during trial that all the permit violations caused no environmental or health injury. Obviously, proceeding through trial would entail significant expense and the risk of an unfavorable result.
In conclusion, the law of standing prior to MEI III was that plaintiffs could demonstrate standing simply by alleging generalized harm from defendants' activities. MEI III illustrates the principle that, notwithstanding permit exceedances, where no actual harm results to the receiving medium from exceedances, there is no "actual injury" and plaintiffs lack standing. In citizen suits brought in the Third Circuit following the MEI III opinion, defendants would be well advised to consider the environmental impact of their exceedances early on; it is not yet clear what effect this opinion will have in other jurisdictions.
