Eleventh Circuit Limits Attorney’s Fees in Clean Water Act Citizen Suit Case

The Eleventh Circuit recently dealt a blow to environmental plaintiffs seeking attorney’s fees in a citizen suit cases brought under the Clean Water Act (“CWA”), holding that winning a case in a trial court is not enough of a reason to award fees, if the case is subsequently reversed on appeal. Friends of the Everglades v. South Florida Management District (“Friends”).[1] The decision also declined attorney’s fees to a plaintiff whose lawsuit spurred EPA rulemaking, because the rule was contrary to the plaintiff’s litigating position.

The Eleventh Circuit’s Friends decision is the latest chapter in long-running litigation over CWA permitting for so-called “water transfers,” or the movement of water from one water body to another through tunnels, channels, or other conveyances. In 2006, the Miccosukee Tribe of Indians of Florida (“Tribe”) and other environmental plaintiffs prevailed in a suit in federal district court to force the South Florida Water Management District (“Water District” or “District”) to obtain a CWA permit for the District’s water transfers. While an appeal was pending, EPA issued a new water transfer rule, under which the District’s water transfers were not subject to CWA permitting requirements.[2] The Eleventh Circuit subsequently reversed the district court, holding that the new rule was valid and therefore the Water District was no longer required to acquire a permit for its water transfers.[3]

In spite of the reversal at the appellate level, the Tribe sought to recover approximately $1.4 million in attorney’s fees incurred as a substantially prevailing party in the district court. The Tribe argued that fees were appropriate because the Tribe had secured an injunction from the district court and its suit had spurred EPA to take action through rulemaking. In Friends, the Eleventh Circuit denied the fee request, concluding that although the CWA authorizes fees to plaintiffs “who do not obtain court-ordered relief but whose suit has a positive catalytic effect,” EPA’s water transfers rulemaking was contrary to remedy sought by the Tribe’s suit.[4] The Eleventh Circuit also refused to consider whether the Water District had influenced EPA to enact the rule in determining whether CWA attorney’s fees were appropriate.

CWA Statutory Background

The CWA[5] prohibits the “discharge of a pollutant” by any person from point sources into waters of the United States without a National Pollutant Discharge Elimination System (“NPDES”) permit.[6] NPDES permits “place limits on the type and quantity of pollutants that can be released into the Nation’s waters.”[7] The CWA broadly defines “discharge of a pollutant” as “any addition of any pollutant to navigable waters from any point source,” but it does not define the term “additional.”[8] Thus, when water containing pollutants is transferred from one body of water to another for public water supplies, irrigation, power generation, flood control, or other uses, the question arises whether the transfer results in a “discharge” of a “pollutant” from a point source that requires an NPDES permit under the Act. The CWA authorizes citizen suits to enforce the CWA’s provisions, including the requirement that a person obtain an NPDES permit.[9] The Act also authorizes the court to award attorney’s fees and costs in a citizen suit to “any prevailing or substantially prevailing party, whenever the court determines that such award is appropriate.”[10]

Background to the Friends Decision

Lake Okeechobee in Florida is the second largest freshwater lake in the continental United States. Water flow into and out of the lake is controlled through a series of gates, dikes, canals, and pump stations, operated by the South Florida Water Management District (“Water District”). The Water District’s flow diversion facilities collect rainwater from agricultural, industrial, and residential areas in canals and pump it back into the lake. During the transfer, the Water District does not subject the waters in the flow diversion facilities to any intervening industrial, municipal or commercial use, or introduce anything to the water as it is conveyed to Lake Okeechobee.[11]
In 2002, environmental groups filed suit in federal district court, alleging that the CWA required the Water District to obtain an NPDES permit for the discharge of water from the flow diversion facilities. Later that same year, the court permitted the Miccosukee Tribe to intervene as a plaintiff. In 2006, the district court held that the CWA required the District to obtain an NPDES to operate the flow diversion facilities because the water transfers resulted in the discharge of pollutants into Lake Okeechobee.[12] In a subsequent 2007 decision, the district court issued an injunction, ordering the Water District to obtain an NDPES permit for the water transfers.[13] Following the decisions, the Miccosukee Tribe sought attorney’s fees as a prevailing party under the CWA. However, the district court terminated the motion at the parties’ request pending the outcome of the parties’ attorney’s fees settlement negotiations.

The Water District appealed to the Eleventh Circuit, but while the appeal was pending, EPA issued the “Water Transfers Rule” in 2008, which excluded water transfers from the NPDES program.[14] Under the Water Transfers Rule, EPA sought to clarify that water transfers are not subject to NPDES requirements, because, under the so-called “unitary waters theory,” transferring contaminated water between distinct water bodies does not constitute an “addition” of pollutants to “navigable waters” that triggers NPDES requirements.[15]

In the ensuing appeal, the Water District argued that an NPDES permit was not warranted because the Eleventh Circuit should defer to EPA’s CWA interpretation in the Water Transfers Rule. The Eleventh Circuit agreed, upholding EPA’s Water Transfers Rule under Chevron-level deference and concluding that EPA’s decision to exclude water transfers from the NPDES program was a reasonable construction of the CWA.[16] Thus, the Eleventh Circuit reversed the district court’s decision that the Water District was required to obtain an NPDES permit for the water transfers.

Following the decision, the Miccosukee Tribe reinstated its motion for attorney’s fees, even though the Eleventh Circuit had reversed the district court’s ruling in the Tribe’s favor. The district court denied the fee petition, and the Tribe appealed to the Eleventh Circuit.

The Eleventh Circuit’s Friends Decision

Before the Eleventh Circuit, the Tribe argued that it was entitled to attorney’s fees under the CWA’s fee provision, 33 U.S.C. § 1365(d), as the “prevailing or substantially party” because it achieved some form of relief thorough its suit. Specifically, the Tribe argued that it not only achieved an injunction at the district court level, but that its suit also acted as a catalyst for the promulgation of the EPA’s new Water Transfers Rule. The Tribe alternatively sought a fee award on equitable grounds, arguing that it had no control over the promulgation of EPA’s Water Transfers Rule and urging the court to consider the Water District’s influence on the EPA to enact the Rule.[17]

The Eleventh Circuit rejected the Tribe’s arguments and affirmed the district court’s denial of fees. The court began with the applicable legal standard – under 33 U.S.C. § 1365(d) a district court may award attorney’s fees in a CWA citizen suit to “any prevailing or substantially prevailing party, whenever the court determines that such award is appropriate.”[18] The court explained that a “prevailing party” is one who prevails on “any significant issue” and thereby achieves some of the benefits sought by bringing suit.[19] Alternatively, a prevailing or substantially prevailing party “is one who prevailed ‘in what the lawsuit originally sought to accomplish,’”[20] or when the party’s suit “has advanced the goals of the [CWA].”[21] The Eleventh Circuit disagreed that the Tribe had prevailed in its suit – indeed, the court noted that although the Tribe secured an injunction before the district court, that injunction was reversed on appeal.[22]

The court also rejected the Tribe’s argument that fees were appropriate because the Tribe’s suit served as a catalyst for EPA’s Water Transfers Rule, even though the Rule was contrary to the Tribe’s position. The court noted that although a court may award CWA fees “whenever … appropriate,” “the term ‘appropriate’ modifies but does not completely reject the traditional rule that a fee claimant must ‘prevail’ before it may recover attorney’s fees.”[23] Thus, the court concluded that while Congress intended the “whenever appropriate” provision to authorize fee awards “‘to plaintiffs who do not obtain court-ordered relief but whose suit has a positive catalytic effect,’ it did not intend for this provision to extend to unsuccessful parties.”[24]

Finally, the Eleventh Circuit declined to grant fees on equitable grounds. The Tribe argued that the Water District influenced EPA to enact the Water Transfers Rule, which undercut the district court decision requiring a NPDES permit for the District’s water transfers. Noting that the Tribe “cites no law in support” of its equitable fees claim, the Eleventh Circuit held that the district court had not abused its discretion in denying fees on equitable grounds.

For more information regarding Friends of the Everglades v. South Florida Water Management District or other water quality issues, contact Russell Prugh or any member of Marten Law’s litigation or water quality practice groups.