Oh Poop – State May Not Prosecute Poultry Companies for Natural Resource Damages Without Tribal Co-Trustee

A federal district court in Oklahoma has thrown out the State of Oklahoma’s attempt to go it alone to recover natural resource damages on behalf of both the state and the Cherokee Nation for damage caused to the Illinois River by runoff from hundreds of thousands of tons of poultry waste. The decision in Oklahoma v. Tyson Foods, Inc.[1] illustrates the dangers for non-tribal natural resource trustees who bring actions under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) without the active participation of tribal co-trustees: such plaintiffs may have their monetary damage claims derailed for failure to join indispensible parties. For defendants in such lawsuits, a good understanding of the potential rights of affected tribes is essential for procedural as well as substantive defenses.

Background

The Cherokee Nation is the second largest Indian tribe in the United States, with more than 200,000 tribal members. Almost 70,000 of its members live in a 7,000 square mile jurisdictional service area that includes all of eight, and portions of six, counties in northeastern Oklahoma. The Cherokee Nation has sovereign rights over assets which include 66,000 acres of land, as well as 96 miles of the Arkansas River riverbed. The tribe claims water rights in the Illinois River, as well as substantial interests in other natural resources within the Illinois River watershed that it contends were established by treaties and federal laws unaffected by statehood.[2]

The million-acre Illinois River watershed is a source of drinking water for 22 public water supply systems in eastern Oklahoma. In June 2005, the State of Oklahoma (‘the State”) filed an action against Tyson Foods and several other poultry companies,[3] alleging that the poultry operations were responsible for runoff from chicken waste that was polluting the Illinois River and damaging its watershed, half of which is in Oklahoma. The State alleged claims for cost recovery and natural resource damages under CERCLA; for nuisance under state and federal law; and for other state law violations, including trespass and pollution claims. At the time the complaint was filed, Oklahoma Attorney General Drew Edmondson pointed at poultry waste as the major source of pollution in the watershed, stating, “We’re not only talking about phosphorus. This waste contains arsenic, zinc, hormones and microbial pathogens like E. coli and fecal coliform - not exactly things you want in your drinking water.”[4]

The poultry companies moved to dismiss the action under Federal Rule of Civil Procedure 19 (“Rule 19”) because the State did not join the Cherokee Nation as a party. Alternatively, the defendants sought judgment as a matter of law, because the State lacked standing to bring injury claims over properties it does not own or hold in trust. As part of its response, the State filed an agreement between Mr. Edmondson and the Cherokee Nation attorney general which purported to assign retroactively the tribe’s claims in the lawsuit to the State, effective as of the date of the filing of the complaint. Finding the agreement to be invalid because it did not comply with Oklahoma law for the formation of such cooperative agreements, and the Cherokee Nation to be a required party for the damages claims, the district court dismissed all of the State’s claims for monetary damages from the poultry companies.

Rule 19 Standards

Rule 19 outlines a three-step process for determining whether an action should be dismissed for failure to join a purportedly indispensable party. A court must first determine whether the absent party is “required.” A person is “required” if:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or

(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:

(i) as a practical matter impair or impede the person's ability to protect the interest; or

(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.[5]

Second, if the absent party is required, the court must determine if joinder is “feasible”. The district court noted that joinder of the Cherokee Nation would not be feasible because the tribe is immune from suit absent waiver by the tribe or abrogation by Congress.[6] Third, if joinder of the absent party is not feasible, the court must decide, after weighing several factors listed in Rule 19, “whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed.”[7] The Rule 19 standards for assessing whether an absent party is indispensible are to be “applied in a practical and pragmatic but equitable manner”, with the burden of persuasion falling on the party moving for dismissal.[8]

The Cherokee Nation’s Interests in the Litigation

To meet the Rule 19 standard, the absent party is not required to possess an interest in the subject matter of the action; the party need only claim an interest.[9] The district court found that the Cherokee Nation claimed substantial interests in lands, waters, and other natural resources in the Illinois River Watershed, although the extent of such interests has not been fully adjudicated. After reviewing the Cherokee Nation’s Environmental Quality Code, the court concluded that the Cherokee Nation claims interests in (1) protecting the Illinois River; (2) vindicating its claimed rights for any pollution of the watershed; and (3) recovering for itself civil remedies for injuries to the watershed.[10] In addition, the court found that as a domestic dependent sovereign, the Cherokee Nation may forego claims for money damages “and, instead, regulate and tax the application of poultry waste to lands within its jurisdiction.”[11]

Further, the “claimed interests of the Cherokee Nation in the water rights portion of the subject matter of this action are substantial and are neither fabricated nor frivolous” due to the reserved water rights associated with the 92,405.97 acres of land held in trust by the United States for the Cherokee Nation.[12] In addition, the court concluded that the tribe has “an arguable, non-frivolous claim it owns much of the surplus water within its historic boundaries” due to the 1835 Treaty with the Cherokee.[13] Finally, the court recognized the cause of action established for tribes by section 107(f)(1) of CERCLA for damages to natural resources belonging to or held in trust for the benefit of a tribe.[14] The court ruled that the Cherokee Nation “claims an interest relating to the subject of this action for Rule 19 purposes.”[15]

Effects of the Cherokee Nation’s Absence on the Litigation

Having previously determined that the Cherokee Nation could not be joined, the district court turned to Rule 19(a)(1)(B), analyzing whether disposing of the action in the Cherokee Nation’s absence might, as a practical matter impair or impede the Cherokee Nation’s ability to protect its interest, or leave the poultry companies subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations.[16]

The court concluded, with respect to claims for monetary damages, that disposing of the case without the Cherokee Nation could impair or impede its ability to protect its interests in natural resources. The court reasoned,

The State seeks damages for pollution to the [Illinois River Watershed] as a whole; it does not attempt to differentiate, segregate and/or exclude damages to tribal lands and water rights. The State's pursuit of such claims for money damages absent the Cherokee Nation ignores the Nation's sovereign right to manage the natural resources within its jurisdiction and seek redress for pollution thereto.[17]

The court was “un-persuaded” that Oklahoma could adequately protect the absent Nation’s interests due to the State’s and the Nation’s “disparate views relating to the jurisdiction and ownership of lands and natural resources in Northeastern Oklahoma.” [18]

Pointing to CERCLA’s prohibition in section 107(f)(1) against double recovery of damages for the same release and natural resource, the court chided the State for making no attempt to differentiate the natural resources “belonging to, managed by, controlled by, or appertaining to the State” and the natural resources “belonging to, managed by, controlled by, or appertaining to the tribe.”As a result, the court could make no determination of the relative ratios or percentages of damages attributable to the State and the Cherokee Nation in the Nation's absence. “One trustee-the State-is therefore likely to be unjustly enriched at the expense of the Nation, thereby impairing the Cherokee Nation's ability to protect its interests.”[19]

Further, the court reasoned that because the Cherokee Nation is the steward of a separate and distinct subset of natural resources in the watershed, it is not in privity with the State, and therefore has its own separate claims for damages under other state law claims. Proceeding without the Cherokee Nation, the court concluded, would leave the poultry companies subject to a substantial risk of double or otherwise inconsistent obligations as well as subsequent litigation by the Cherokee Nation.[20]

The court ruled that the action could not go forward on the State’s claims for monetary damages because to do so would prejudice both the Cherokee Nation and the poultry companies:

The State has not suggested, and this court has not discovered, a way by which prejudice to the Cherokee Nation and/or defendants could be lessened or avoided by protective provisions in the judgment, shaping the relief, or other measures. Without a legally binding assignment of the Cherokee Nation's rights and interests in the [Illinois River Watershed], a damage award to the State either abridges the right of the Cherokee Nation to pursue its own claim for money damages or, to the extent the Cherokee Nation is not barred by issue or claim preclusion, conversely exposes defendants to the risk of multiple, inconsistent judgments. And as previously noted, if the State loses its claim for damages, defendants face a real and substantial risk the Cherokee Nation, unfettered by issue and claim preclusion, would pursue damage claims on its own.[21]

The court rather pointedly explained that the State could have solved its procedural problems by either coming to terms with the Cherokee Nation in a legally binding agreement, or by not thwarting the poultry companies’ two year effort to have the State clarify “what specific lands and resources the State claims to own and alleges were injured.”[22]

Conclusion

To successfully withstand motions to dismiss such as the one in Oklahoma v. Tyson Foods, tribal and non-tribal natural resource trustees must either tackle and resolve tough issues of ownership and control over natural sources before bringing separate actions for monetary damages, or join together to such monetary claims so that all trustees can protect their claimed interests. Otherwise, in the absence of such resolution, potential defendants may use Rule 19 to persuade courts not to proceed with these complex and challenging damages actions.

For further information about natural resource damage litigation, please contact Linda Larson or any other member of Marten Law Group’s Litigation Practice Group.