Sierra Club v. Two Elk Generation Partners, Ltd. Partnership

FILED
United States Court of Appeals
Tenth Circuit

May 31, 2011
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

SIERRA CLUB,

Plaintiff - Appellant,
No. 10-8032
v.

TWO ELK GENERATION
PARTNERS, LIMITED
PARTNERSHIP,

Defendant - Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF WYOMING
(D.C. No. 2:09-CV-00022-WFD)

Elena Saxonhouse (and Sanjay Narayan of Seirra Club Environmental Law
Program, on the briefs), San Francisco, California, for Plaintiff - Appellant.

Michael C. Theis (and Andrew C. Lillie of Hogan, Lovells, US, L.L.P., Denver,
Colorado; Mary A. Throne of Throne Law Office, P.C., Cheyenne, Wyoming, on
the brief), for Defendant - Appellee.

Before KELLY, TACHA, and LUCERO, Circuit Judges.

KELLY, Circuit Judge.

Plaintiff-Appellant Sierra Club filed this action on January 29, 2009 under

the citizen suit provision of the Clean Air Act (“CAA”), 42 U.S.C. § 7604(a)(3),
alleging that Defendant-Appellee Two Elk Generation Partners (“Two Elk”) is

attempting to build a coal-fired power plant (“Power Plant”) with an invalid

Prevention of Significant Deterioration (“PSD”) permit in violation of the CAA. 1

The district court granted Two Elk’s motion to dismiss, holding that Sierra Club’s

suit was barred by the doctrine of issue preclusion. We have jurisdiction pursuant

to 28 U.S.C. § 1291, and we affirm.

Background

Two Elk first proposed building the Power Plant in 1996, and the Wyoming

Department of Environmental Quality (“DEQ”) issued a construction permit, CT-

1352, in February 1998. Aplt. App. at 14. The DEQ administers and enforces the

Wyoming Environmental Quality Act and is the primary regulatory authority for

air quality in Wyoming. See Powder River Basin Res. Council v. Wyo. Dep’t of

Envtl. Quality, 226 P.3d 809, 813 (Wyo. 2010). In February 2000, DEQ issued a

revised permit, CT-1352A, which required Two Elk to begin construction no later

than February 2002. Aplt. App. at 14. Two Elk received an extension until

1
The following acronyms are utilized:

CAA Clean Air Act
Council Wyoming Environmental Quality Council
CWA Clean Water Act
DEQ Wyoming Department of Environmental Quality
PSD Prevention of Significant Deterioration
WAQSR Wyoming Air Quality Standards and Regulations

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August 2002, but in September 2002, DEQ advised Two Elk via letter that CT-

1352A was no longer valid because Two Elk had not commenced construction on

the Power Plant. Id. at 14-15, 100. Two Elk appealed the DEQ’s determination

to the Wyoming Environmental Quality Council (“Council”), a separate and

independent board of seven members that hears and determines cases arising

under the laws, rules, regulations, standards or orders issued or administered by

the DEQ. Id. at 15; Wyo. Outdoor Council v. Wyo. Dep’t of Envtl. Quality, 225

P.3d 1054, 1056-57 (Wyo. 2010) (describing Council); Wyo. Stat. Ann. § 35-11-

112. On May 29, 2003, the Council approved a joint stipulation between the

parties, which resulted in a modified permit, CT-1352B (the “Permit”). Aplt.

App. at 15. In accordance with the PSD provisions of the Wyoming Air Quality

Standards and Regulations (“WAQSR”)—which the EPA has determined comply

with the CAA, 40 C.F.R. § 52.2630—the Permit provided that if (1) construction

or modification did not commence by May 29, 2005 or (2) construction was

discontinued for a period of twenty-four months or more, the Permit would

become invalid. Aplt. App. at 78; 6 WAQSR § 2(h). Specifically, the Permit

states that before May 29, 2005, Two Elk was required to (1) complete

construction on any one of the following foundations: main boiler, main stack,

stream turbine, or air-cooled condenser, and (2) enter into a binding contract to

purchase a site-specific main boiler or steam turbine. Aplt. App. at 78. The

Council retained jurisdiction over the matter to determine Two Elk’s compliance

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with the joint stipulation. Id. at 87.

At some point, DEQ determined that Two Elk commenced construction

prior to May 29, 2005, as required by the Permit. Id. at 88. Two Elk then filed

an unopposed motion to dismiss the matter before the Council. Id. at 87. On July

18, 2005, after a hearing at which the parties were given an opportunity to be

heard concerning the motion, the Council issued an order (“2005 Order”) finding

that Two Elk had commenced construction on the Power Plant by pouring a

foundation for the Power Plant’s exhaust stack and entering into a contract to

purchase a main boiler. Id. at 87-88. The Council concluded that the Permit was

valid, dismissed the matter, and terminated jurisdiction. Id.

On August 22, 2007, DEQ sent a letter to Two Elk stating that the Permit

was no longer valid because construction had been discontinued for more than

twenty-four months since first commenced. Id. at 208. On October 19, 2007,

Two Elk filed a Petition for Review and Request for Immediate Stay with the

Council, asking the Council to review the revocation of the Permit. Id. at 145.

On November 21, 2007, after Two Elk disclosed confidential business

information to DEQ, the two parties entered a Joint Stipulated Settlement

Agreement. Id. at 145-46. The Settlement stated that “[b]ased on its review of

confidential business information and other documentation provided by [Two

Elk], the [DEQ] has determined that [Two Elk] has not discontinued construction

for a period of 24 months or more and is in compliance with [the Permit].” Id. at

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72. On the same day, Two Elk and DEQ filed a Joint Motion for Dismissal of

Appeal, Approval of Settlement Stipulation, and Request for Setting of Hearing.

Id. at 91-93, 146.

The Council conducted a hearing on November 28, 2007 where Council

members expressed concern that the delay in construction meant that the Permit

was outmoded and did not require the implementation of newer and more efficient

emissions technologies, and also that Two Elk was tying up a portion of

Wyoming’s allotted pollution. Id. at 104-06. Two Elk assured the Council that it

was taking steps to complete construction, and a DEQ representative stated that

the Settlement Agreement required Two Elk to apply newer technology, as

required by DEQ-issued permits for other power plants. Id. at 97. On December

3, 2007, the Council issued an order approving the Settlement Agreement,

approving the withdrawal of the DEQ’s August 22 letter, and dismissing Two

Elk’s appeal (“2007 Order”). Id. at 114-15. The 2007 Order specifies that all the

terms of the Settlement Agreement are adopted. Id. at 114.

At no point prior to the 2007 Order did Sierra Club attempt to intervene in

the proceedings before the Council. Id. at 147. On December 20, 2007, however,

Sierra Club filed a Motion to Intervene and for Reconsideration and Vacation of

the Council’s 2007 Order. Id. The Council determined that it lacked jurisdiction

over the dispute and dismissed the motion. Id.

On December 20, 2007, Sierra Club also filed a Petition for Review of

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Administrative Action in state district court pursuant to the Wyoming

Administrative Procedures Act, Wyo. Stat. Ann. § 16-3-114. Aplt. App. at 144.

Sierra Club argued, among other things, that none of the facts in the Joint

Stipulated Settlement Agreement supported the Council’s 2007 Order approving

DEQ’s determination that Two Elk had engaged in continuous, on-site

construction during the relevant twenty-four month period. Id. at 147-48. The

state court rejected this argument and affirmed the Council’s 2007 Order on

March 12, 2009. Id. at 160. On April 9, 2009, Sierra Club appealed to the

Wyoming Supreme Court, but voluntarily dismissed that appeal. Id. at 313, 320.

On January 29, 2009, as the state court decision was pending, Sierra Club

filed its citizen suit under the CAA in federal court, seeking a declaration that

Two Elk lacked a valid permit to construct the Power Plant in violation of 42

U.S.C. § 7475(a), and penalties under 42 U.S.C. § 7604(g). Id. at 22.

Specifically, Sierra Club asserted that the Permit is invalid because Two Elk

failed to commence construction prior to May 29, 2005, and, even if it did

commence construction, the Permit is still invalid because Two Elk discontinued

construction for a period of twenty-four months after that time. Id. at 21-22.

Two Elk filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6), arguing that

these issues were already decided by the Council and thus were barred by the

doctrine of claim preclusion. Id. at 61-66. In addition, Two Elk argued that the

court should abstain from exercising federal jurisdiction over the matter pursuant

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to the Burford abstention doctrine. Id. at 51-61.

The district court declined to abstain under Burford, but granted Two Elk’s

motion to dismiss because Sierra Club’s citizen suit was barred by the Council’s

2005 and 2007 Orders under the doctrine of issue preclusion. Id. at 330-32, 336-

45. Sierra Club moved for reconsideration, or, in the alternative, clarification

pursuant to Fed. R. Civ. P. 59(e) based on the court’s misunderstanding of the

facts and new evidence. Id. at 382-385. The court denied the motion on March

23, 2010. Id. at 525.

On appeal, Sierra Club argues that the district court erred because the

statutory language of the CAA establishes the circumstances in which a citizen

suit may be precluded by a state action and those circumstances were not met

here. In addition, Sierra Club contends that its citizen suit cannot be barred under

the doctrine of issue preclusion because Sierra Club was not a party to the

administrative proceedings and was not in privity with the DEQ, and the Council

did not resolve disputed issues of fact in an adversarial proceeding. Aplt. Br. at

ii-iii, 1-2. This court reviews a dismissal under Fed. R. Civ. P. 12(b)(6) de novo.

Moss v. Kopp, 559 F.3d 1155, 1161 (10th Cir. 2009).

Discussion

A. Preclusion Under the CAA

Sierra Club first argues that the statutory language of the CAA establishes

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the only way in which a citizen suit may be precluded by a state action, and that

those circumstances were not present here. Aplt. Br. at 31-32. Under the CAA, a

citizen suit may not be commenced “if the Administrator or State has commenced

and is diligently prosecuting a civil action in a court of the United States or a

State to require compliance with the standard, limitation, or order, but in any such

action in a court of the United States any person may intervene as a matter of

right.” 42 U.S.C. § 7604(b)(1)(B).

Sierra Club’s argument that the CAA’s statutory language embodies

Congress’s intent to displace the full faith and credit statute, 28 U.S.C. § 1738,

and the common law doctrines of issue and claim preclusion is not persuasive.

Numerous courts have applied § 1738 and the common law preclusion doctrines

to citizen suits under the CAA or Clean Water Act (“CWA”) where, at the time

the citizen suit was commenced, the State or Administrator was not “diligently

prosecuting” an enforcement action. See, e.g., Ellis v. Gallatin Steel Co., 390

F.3d 461, 473-74 (6th Cir. 2004); Friends of Milwaukee’s Rivers v. Milwaukee

Metro. Sewerage Dist., 382 F.3d 743, 757-65 (7th Cir. 2004); Froebel v. Meyer,

217 F.3d 928, 933-37 (7th Cir. 2000); United States EPA v. City of Green Forest,

921 F.2d 1394, 1403-05 (8th Cir. 1990); Wilder v. Thomas, 854 F.2d 605, 616-21

(2d Cir. 1988); see also St. Bernard Citizens for Envtl. Quality, Inc. v. Chalmette

Ref., LLC, 500 F. Supp. 2d 592, 601-03 (E.D. La. 2007) (expressly rejecting

argument that the CAA’s statutory language establishes the only way in which a

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citizen suit may be precluded).

To be sure, “an exception to § 1738 will not be recognized unless a later

statute contains an express or implied partial repeal.” Kremer v. Chem. Constr.

Corp., 456 U.S. 461, 468 (1982). The CAA contains no express language

concerning § 1738 or the preclusive effect of related state court proceedings.

Thus, any repeal must be implied. The Supreme Court “ha[s] seldom, if ever,

held that a federal statute impliedly repealed § 1738.” Matsushita Elec. Indus.

Co. v. Epstein, 516 U.S. 367, 380 (1996) (citations omitted). A federal statute

can impliedly repeal § 1738 only if there is an “irreconcilable conflict” between

the two statutes. Id. at 381 (quotation marks and citation omitted). There is no

such conflict here.

The CAA’s commencement bar to citizen suits applies only if the

“Administrator or State has commenced and is diligently prosecuting” an

enforcement action. 42 U.S.C. § 7604(b)(1)(B) (emphasis added). The Supreme

Court has explained Congress’s deliberate use of verb tense in the citizen suit

provision of the CWA. See Gwaltney of Smithfield, Ltd. v. Chesapeake Bay

Found., 484 U.S. 49, 59-60 (1987). As the Fourth Circuit has observed, “the verb

tenses used in [the commencement bar to citizen suits in the CWA] and the

scheme of the statute demonstrate that the bar was not intended to apply unless

the government files suit first (and is diligently prosecuting such suit).”

Chesapeake Bay Found. v. Am. Recovery Co., Inc., 769 F.2d 207, 208 (4th Cir.

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1984); see also Adkins v. VIM Recycling, Inc., --- F.3d ----, 2011 WL 1642860,

at *8 (7th Cir. May 3, 2011) (analyzing verb tenses of similarly worded

commencement bar in the Resource Conservation and Recovery Act). The

commencement bar does not apply here—where the Administrator or the State

was not diligently prosecuting an enforcement action at the time the citizen suit

was filed—and therefore does not conflict with our application of § 1738 or

common law preclusion principles.

Applying the doctrine of issue preclusion, the district court held that Sierra

Club’s citizen suit is barred by the Council’s 2005 and 2007 Orders. Aplt. App.

at 345. The court explained that it need not consider the Wyoming district court’s

order in its preclusion analysis. Id. at 346. Under our preclusion analysis, we

conclude that Sierra Club’s citizen suit is barred, but on a slightly different

rationale than the district court’s. First, the issue of whether Two Elk engaged in

continuous construction is precluded by the Wyoming district court’s March 12,

2009 Order. In addition, as the federal district court concluded, the issue of

whether Two Elk commenced construction before May 29, 2005 is precluded by

the Council’s 2005 Order.

B. Preclusive Effect of the Wyoming District Court’s March 12, 2009 Order

“‘The preclusive effect of a state court judgment in a subsequent federal

lawsuit generally is determined by the full faith and credit statute,’ 28 U.S.C.

§ 1738, which ‘directs a federal court to refer to the preclusion law of the State in

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which judgment was rendered.’” Brady v. UBS Fin. Servs., Inc., 538 F.3d 1319,

1327 (10th Cir. 2008) (quoting Marrese v. Am. Acad. of Orthopaedic Surgeons,

470 U.S. 373, 380 (1985)). “It is well established that judicial affirmance of an

administrative determination is entitled to preclusive effect.” Kremer, 456 U.S. at

480 n.21 (citations omitted); see also Goodman v. Voss, 248 P.3d 1120, 1127

(Wyo. 2011) (affording preclusive effect to judicial affirmance of administrative

decision). “There is no requirement that judicial review [of an administrative

determination] must proceed de novo if it is to be preclusive.” Kremer, 456 U.S.

at 481 n.21.

In deciding whether the Wyoming district court’s affirmance of the

Council’s 2007 Order precludes the current suit, we must determine whether the

decision would be entitled to preclusive effect under Wyoming law and whether it

satisfied the minimum standards of due process. Id. at 481-82; Wilder, 854 F.2d

at 616 (citing Kremer, 456 U.S. at 481) (applying common law preclusion to

citizen suit under CAA). “Due process . . . only requires that a party have a full

and fair opportunity to litigate its case.” Crocog Co. v. Reeves, 992 F.2d 267,

270 (10th Cir. 1993) (citing Kremer, 456 U.S. at 482-83 & n.24).

Under Wyoming law, “[c]ollateral estoppel and res judicata are analogous,

but not synonymous.” Erwin v. Wyo. Dep’t of Family Servs., 237 P.3d 409, 412

(Wyo. 2010) (quotation marks and citation omitted). Both doctrines “incorporate

a universal legal principle of common-law jurisprudence to the effect that a right,

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question or fact distinctly put in issue and directly determined by a court of

competent jurisdiction . . . cannot be disputed in a subsequent suit between the

same parties or their privies.” Id. (quotation marks and citation omitted). Res

judicata bars the relitigation of previously litigated claims or causes of action,

while collateral estoppel bars relitigation of previously litigated issues. Id.

(citations omitted). We apply the doctrine of collateral estoppel here because the

state court decided only one of the two issues presented to this court.

Courts should consider the following factors to determine whether

collateral estoppel applies under Wyoming law:

(1) whether the issue decided in the prior adjudication was identical
with the issue presented in the present action; (2) whether the prior
adjudication resulted in a judgment on the merits; (3) whether the party
against whom collateral estoppel is asserted was a party or in privity
with a party to the prior adjudication; and (4) whether the party against
whom collateral estoppel is asserted had a full and fair opportunity to
litigate the issue in the prior proceeding.

Brockman v. Wyo. Dep’t of Family Servs., 342 F.3d 1159, 1166 (10th Cir. 2003)

(quoting Kahrs v. Bd. of Trs. for Cnty. Sch. Dist. No. 1, 901 P.2d 404, 406 (Wyo.

1995)).

The Wyoming district court’s May 12, 2009 Order precludes the issue of

whether Two Elk engaged in continuous construction of the Power Plant, as the

four requirements of collateral estoppel under Wyoming law and the minimum

requirements of due process are met. First, the issue—whether Two Elk engaged

in continuous construction of the Power Plant—was identical. In state court,

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Sierra Club argued that “none of the facts described in the settlement agreement

support [the Council’s] Order approving DEQ’s determination that [Two Elk]

engaged in a continuous program of physical on-site construction of [the Power

Plant] between 2005 and 2007.” Aplt. App. at 147. It makes the same argument

here. The second and third elements are met because the court issued a judgment

on the merits, and Sierra Club was a party to the proceeding. Finally, Sierra Club

had a full and fair opportunity to litigate the issue before the court. A hearing

was held on June 23, 2008 in which all parties were represented. Id. at 144.

Although the arguments dealt primarily with the appropriateness of the Council as

a party—Sierra Club initially named the Council as a respondent—both Two Elk

and Sierra Club submitted briefs regarding the pertinent issues, and the court

concluded that no further argument would be of assistance in determining the

matter. Id. The court reviewed the entire record in making its ultimate decision.

Id.

In its order, the court explained that “[a]s always, an agency’s conclusions

of law are reviewed de novo, and are afforded no deference. The legal

conclusions will be affirmed only if they are in accordance with the law.” Id. at

150 (citing Dale v. S&S Builders, LLC, 188 P.3d 554, 561-62 (Wyo. 2008)). 2

2
While it is true, as the dissent observes, that Wyoming courts review the
factual determinations of an agency under a substantial evidence test, see
Goodman, 248 P.3d at 1132, the court here reviewed a legal
determination—namely, whether Two Elk had engaged in “construction”—and

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The court then addressed whether Two Elk’s actions constituted “construction,”

defined under WAQSR Chapter 6 § 4(a) as “any physical change or change in the

method of operation (including fabrication, erection, installation, demolition, or

modification of an emissions unit) which would result in a change in emissions.”

Id. at 159. The definition of construction is the same under federal regulations.

See 40 C.F.R. § 52.21(b)(8). After reviewing the record, the court concluded that

Two Elk’s activities met the definition; thus construction had not ceased for a

period of twenty-four months or longer. Aplt. App. at 160. Because Sierra Club

had a full and fair opportunity to litigate the issue of whether Two Elk engaged in

continuous construction, the minimum standards of due process were met. See

Crocog Co., 992 F.2d at 270.

Sierra Club’s argument that preclusion is not appropriate because the

Wyoming court reviewed only a closed record that Sierra Club never had the

opportunity to develop is without merit. Aplt. Reply Br. at 32. Sierra Club did

not attempt to intervene in the proceedings until after the Council issued its 2007

Order. Aplt. App. at 147. Indeed, during the federal district court’s hearing on

Two Elk’s motion to dismiss, counsel for Sierra Club admitted that Sierra Club

afforded no deference to the Council’s decision. This case cannot be compared to
Doles v. State, 163 P.3d 819, 823 (Wyo. 2007), where an acquittal in a criminal
case did not collaterally estop the State from a pursuing a forfeiture action
because “[a] general verdict of not guilty in a criminal case simply does not
answer the same question asked in a civil forfeiture action.”

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did not intervene at an earlier stage because it believed DEQ would adequately

prosecute the matter. Id. at 338-39. Specifically, counsel stated that “the hope

was that the state would enforce this issue of the permit becoming invalid. And

as far as the Sierra Club could tell, that was happening until we got word of the

settlement agreement between Two Elk and DEQ in 2007, about a week before

that was approved by council.” Id. Further, Sierra Club never appeared at the

Council hearing on November 28, 2007 to contest the Stipulated Settlement

Agreement between Two Elk and DEQ, despite a week’s notice that the Council

would be holding a hearing on the settlement. See Aplt. Br. at 55. As the state

court observed, “[t]hroughout the administrative process, [Sierra Club] remained

mute and chose to speculate on the outcome of the dispute. When the dispute was

concluded and [Sierra Club] determined that misfortune had come their way, they

then chose to voice their displeasure. This conduct is contrary to the Wyoming

supported policies of settlement and finality and will not be condoned.” Aplt.

App. at 158. “The fact that [Sierra Club] failed to avail [itself] of the full

procedures provided by state law does not constitute a sign of their inadequacy.”

Kremer, 456 U.S. at 485 (citations omitted).

Accordingly, the Wyoming district court’s March 12, 2009 Order affirming

the Council’s 2007 Order precludes the issue of whether Two Elk engaged in

continuous construction. We now address whether the Council’s 2005 Order

precludes the issue of whether Two Elk timely commenced construction on the

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Power Plant.

C. Preclusive Effect of the Council’s 2005 Order

“The United States Supreme Court has ‘long favored the application of the

common-law doctrines of collateral estoppel (as to issues) and res judicata (as to

claims) to those administrative bodies that have attained finality.’” Brockman,

342 F.3d at 1166 (quoting Astoria Fed. Sav. & Loan Assoc. v. Solimino, 501 U.S.

104, 107 (1991)). The Council’s 2005 Order is preclusive so long as Wyoming

courts would give it preclusive effect. See Brockman, 342 F.3d at 1165 (citing

Univ. of Tenn. v. Elliot, 478 U.S. 788, 799 (1986)).

As the district court noted, the Wyoming Supreme Court generally applies

collateral estoppel to administrative decisions. See Elliot v. State, 247 P.3d 501,

503 (Wyo. 2011). Accordingly, we consider the same collateral estoppel factors

discussed above. In addition, because an administrative agency is involved, we

must address whether the agency was “‘acting in a judicial capacity and

resolve[d] disputed issues of fact properly before it which the parties have had an

adequate opportunity to litigate.’” Slavens v. Bd. of Cnty. Comm’rs, 854 P.2d

683, 685 (Wyo. 1993) (quoting United States v. Utah Const. & Mining Co., 384

U.S. 394, 422 (1966)).

1. Elements One, Two, and Four of Collateral Estoppel Under Wyoming
Law are Satisfied

Elements one, two, and four of collateral estoppel under Wyoming law are

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met here. See Brockman, 342 F.3d at 1166. The issue—whether Two Elk

commenced construction—was identical. The 2005 Council proceedings ended

with a judgment on the merits, as the Council determined that Two Elk had

commenced construction, dismissed the matter, and terminated jurisdiction. Aplt.

App. at 88. Finally, DEQ had a full and fair opportunity to litigate the issue

before the Council. Indeed, the Council held a hearing on June 27, 2005 at which

the parties were given an opportunity to be heard concerning Two Elk’s motion to

dismiss. Id. at 87; see also Pokorny v. Salas, 81 P.3d 171, 176 (Wyo. 2003)

(“[T]he requirement is that the party be presented with the opportunity to

litigate.”).

2. DEQ and Sierra Club were in Privity During the Council’s 2005
Proceedings

Under Wyoming law, “[c]ollateral estoppel may be applied to one who was

a party to the prior proceeding or to one who was in privity with a party.”

Worman v. Carver, 44 P.3d 82, 89 (Wyo. 2002). To our knowledge, the

Wyoming Supreme Court has not addressed whether privity may be established

between a state agency and its citizens when the state is acting in its parens

patriae capacity.

Sierra Club argues that we must look to the Supreme Court’s recent opinion

in Taylor v. Sturgell, 553 U.S. 880 (2008), to determine whether privity exists

under Wyoming law. In Taylor, the Court expressly rejected an expansive

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doctrine of virtual representation as an exception to the general rule against

nonparty preclusion, and described six recognized (non-conclusive) exceptions to

the general rule under federal common law. 553 U.S. at 893-895; see also Pelt v.

Utah, 539 F.3d 1271, 1282 (10th Cir. 2008) (discussing Taylor).

It is not clear how Taylor will affect the Wyoming Supreme Court’s privity

analysis. Some state courts, relying on the Supreme Court’s statement in

Richards v. Jefferson County, 517 U.S. 793, 797 (1996) that “[s]tate courts are

generally free to develop their own rules for protecting against the relitigation of

common issues or the piecemeal resolution of disputes,” have not altered their

preclusion standards after Taylor. See City of Chicago v. St. John’s United

Church of Christ, 935 N.E.2d 1158, 1168 (Ill. App. 2010); State v. Ohio Pub.

Emps. Retirement Bd., 905 N.E.2d 1210, 1218 (Ohio 2009). The Wyoming

Supreme Court has not addressed Taylor, but a recent opinion discussing privity

does not mention Taylor. See Elliot, 247 P.3d at 503-04. In addition, the Taylor

Court expressly stated that its list of exceptions “is meant only to provide a

framework for [its] consideration of virtual representation, not to establish a

definitive taxonomy,” id. at 893 n.6, and the Court never discussed the doctrine of

parens patriae or citizen suits. Because the Wyoming Supreme Court has not

adopted Taylor, and because Taylor did not address whether privity may be

established between a state agency and its citizens when the state is acting in its

parens patriae capacity, we will not rely on Taylor here. Instead, mindful that the

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Wyoming Supreme Court has relied on federal precedent in discussing privity for

collateral estoppel purposes, see Worman, 44 P.3d at 89, and in deciding

Wyoming air quality cases, see Powder River Basin Res. Council, 226 P.3d at

813, we predict that the Wyoming Supreme Court would rely on federal case law

addressing whether the doctrine of parens patriae can establish privity under the

CAA or CWA. See TMJ Implants, Inc. v. Aetna, Inc., 498 F.3d 1175, 1180 (10th

Cir. 2007) (“Where no controlling state decision exists, the federal court must

attempt to predict what the state's highest court would do.” (quotation marks and

citation omitted)).

The doctrine of parens patriae “refers to the ‘right of a State to sue . . . to

prevent or repair harm to its ‘quasi-sovereign’ interests.’” BP Am., Inc. v.

Oklahoma, 613 F.3d 1029, 1031 n.* (10th Cir. 2010) (quoting Hawaii v. Standard

Oil Co., 405 U.S. 251, 258 (1972)). “In order to maintain [a parens patriae]

action, the State must articulate an interest apart from the interests of particular

private parties . . . . The State must express a quasi-sovereign interest.” Satsky

v. Paramount Commc’ns, Inc., 7 F.3d 1464, 1469 (10th Cir. 1993) (quotation

marks and citation omitted). “When a state litigates common public rights [under

the doctrine of parens patriae], the citizens of that state are represented in such

litigation by the state and are bound by the judgment.” Id. at 1470 (citations

omitted).

In Satsky, we concluded that citizens of Colorado were in privity with the

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State of Colorado under the doctrine of parens patriae where the State filed suit

against the defendant to protect its citizens against air pollution. Id. at 1469.

Similarly, in EPA v. City of Green Forest, the Eighth Circuit decided that

plaintiffs who filed suit under the CWA were in privity with the EPA—which is

charged with enforcing the CWA on behalf of all citizens—where the EPA, acting

as parens patriae, brought an action against a polluter that resulted in a consent

decree. 921 F.2d at 1403-04. Both the State of Colorado and the EPA had the

authority to assert common public rights and acted to protect citizens from

damage to natural resources.

Relying on Satsky, the district court concluded that DEQ was in privity

with the citizens of Wyoming under the parens patriae doctrine. Aplt. App. at

339. We agree. The Wyoming Supreme Court recently explained that “[a]s the

administrative agency statutorily charged with carrying out the purposes of the

Environmental Quality Act, including the promulgation, administration and

enforcement of the Act’s provisions and any rules and regulations, DEQ

represent[s] the State’s legal interest . . . before the [Council].” Wyo. Outdoor

Council, 225 P.3d at 1059. 3 DEQ had the authority to act on behalf of the citizens

of Wyoming and acted to protect common public rights in the proceedings before

3
The Wyoming Environmental Quality Act “is intended to be compatible
with, and at least as stringent as, the federal Clean Air Act.” Powder River Basin
Res. Council, 226 P.3d at 813.

- 20 -
the Council that culminated in the Council’s July 18, 2005 Order. Aplt. App. at

87. DEQ was in privity with the citizens of Wyoming.

Even if Wyoming courts were to look to the more stringent standard for

parens patriae articulated in Friends of Milwaukee’s Rivers v. Milwaukee

Metropolitan Sewerage District, we conclude that the citizens of Wyoming were

in privity with the DEQ. 382 F.3d at 758-60. In Friends, the Seventh Circuit first

explained that a non-party to a previous action can be in privity with an agency

invested by law to represent the person’s interests, but only if the representative

prosecuted or defended the previous action with due diligence and reasonable

prudence. Id. at 758-59 (citing Restatement (Second) of Judgments §§ 41(1)(d),

42(1)(e)). The court then looked to the language of the CWA to determine the

meaning of “diligent prosecution” and concluded that “the focus of the diligent

prosecution inquiry should be on whether the actions are calculated to eliminate

the cause(s) of the violations.” Id. at 759-60.

Our discussion of the CWA’s “diligent prosecution” standard in Karr v.

Hefner, 475 F.3d 1192, 1198 (10th Cir. 2007), is instructive. 4 In Karr, we

explained that “[c]itizen plaintiffs must meet a high standard to demonstrate that

4
We note that our use of the phrase “diligent prosecution” is not an
interpretation of the CAA’s statutory language in 42 U.S.C. § 7604(b)(1)(B).
Rather, we are using the diligence standard to determine whether privity existed
between DEQ and Two Elk under the parens patriae doctrine for purposes of
collateral estoppel.

- 21 -
[the EPA] has failed to prosecute a violation diligently” under the CWA, id. at

1198 (citations omitted), and that government action need not be “far-reaching or

zealous.” Id. at 1197. In addition, we noted that “an agency’s prosecutorial

strategy [need not] coincide with that of the citizen-plaintiff,” and that “an

unsatisfactory result does not necessarily imply lack of diligence.” Id.

DEQ was diligent in requiring compliance with the CAA before the Council

in 2005. On October 23, 2002, Two Elk filed a petition with the Council

contesting DEQ’s decision that Two Elk’s CT-1352A permit had terminated

because Two Elk had failed to commence construction prior to August 20, 2002.

Aplt. App. at 87. Two Elk and DEQ then entered into a Joint Stipulation and

filed it with the Council on May 28, 2003. Id. The terms of the stipulation

included an agreement to extend the deadline for commencing construction and to

reduce certain emissions standards. Id. The Council approved the Joint

Stipulation and retained jurisdiction over the matter to ensure compliance with the

terms of the stipulation. Id. In accordance with the stipulation, DEQ issued the

current Permit, which required Two Elk to commence construction before May

29, 2005. Id. at 88.

Two Elk submitted documentation showing that it commenced construction

on the Power Plant to DEQ, and DEQ found as a matter of fact that “prior to May

29, 2005, [Two Elk] completed the construction of the foundation for the main

stack, and entered into a binding written contract to purchase a site-specific

- 22 -
boiler.” Id. Two Elk then moved to dismiss the matter before the Council. Id. at

87. On July 18, 2005, after a June 27, 2005 hearing at which the parties were

given an opportunity to be heard concerning the motion, the Council found that

“[Two Elk] has . . . commenced construction as required by [the Permit],” and

dismissed the matter. Id. at 87-88.

Even though Sierra Club disagrees with the position DEQ took and was not

satisfied with the result of the Council’s 2005 Order, DEQ acted to ensure that

Two Elk commenced construction before May 29, 2005, in accordance with the

PSD Permit.

We conclude that DEQ was in privity with the citizens of Wyoming in the

2005 Council proceedings under the doctrine of parens patriae. Thus, DEQ was

in privity with Sierra Club, which represents the interests of citizens of

Wyoming. 5

3. The Council Resolved Disputed Issue of Fact in an Adversarial
Proceeding

Sierra Club also argues that the Council’s 2005 Order does not preclude the

5
We reject Sierra Club’s argument that it was not in privity with DEQ
because of its national membership. As the Ninth Circuit has pointed out in an
unpublished opinion, while a state acting pursuant to its parens patriae authority
typically acts on the behalf of its own citizens, privity can still exist between the
state and an organization with out-of-state members where the public interest
being represented by both parties is overwhelmingly that of the state. N. Cal.
River Watch v. Humboldt Petroleum, Inc., 162 F. App’x 760, 764-65 (9th Cir.
2006) (unpublished).

- 23 -
issue of whether Two Elk commenced construction because the Council never

resolved disputed issues of fact in an adversarial proceeding as required by

Wyoming law. See Slavens, 854 P.2d at 685. Sierra Club’s contentions are not

persuasive. As discussed above, the Council’s 2005 Order expressly found and

concluded that Two Elk “commenced construction as required by [the Permit];”

thus, the Council resolved the disputed issue as to whether Two Elk had complied

with the commence construction requirement of the Permit. Aplt. App. at 88. In

addition, the proceeding that ended in the Council’s 2005 Order was an

adversarial proceeding, as it began when Two Elk appealed DEQ’s decision that

Two Elk’s CT-1352A permit had terminated. Id. at 87.

Sierra Club’s argument that the Council’s 2005 Order should not be given

preclusive effect because the Council did not make any findings of fact is without

merit. Sierra Club cites Morgan v. City of Rawlins, 792 F.2d 975, 980 (10th Cir.

1986), where this court, applying Wyoming law, refused to apply preclusive

effect to a state court decision “[a]bsent any findings of fact or conclusions of law

in the [prior state court proceeding].” In Morgan, however, the state court

dismissed the plaintiff’s prior suit “with no written order . . . to elucidate the

basis for the dismissal and no other findings to provide any shape or direction to

this court’s inquiry.” Id. at 977. Without any evidence of the state court

proceeding on the record, we were unable to determine whether the substantive

issues of the plaintiff’s § 1983 suit were litigated in the prior proceeding. Id. at

- 24 -
979. This differs from the current case, where the Council explained that

progress had been made on a foundation for the main stack and a binding contract

for a boiler existed, and decided the exact issue that Sierra Club asks us to decide,

namely, whether Two Elk commenced construction on the Power Plant.

D. The Dissent

The dissent contends that privity between Sierra Club and DEQ cannot be

established under Satsky, Green Forest, or Friends, stressing that privity is not

appropriate where the DEQ never initiated an action in federal court. It also

argues that the court expands the doctrine of parens patriae such that any suit in

which a state appears as a party is a parens patriae proceeding. We disagree and

note that citizen suits under the similarly worded CWA are “meant to supplement

rather than to supplant governmental action.” Gwaltney, 484 U.S. at 60.

The dissent identifies and places great weight on various “limitations” the

Satsky court placed on parens patriae actions. But the court never imposed such

limitations. In Satsky, the court of appeals mentioned that the district court had

determined the State represented its citizens, and then explained that the critical

question for maintaining a parens patriae action is whether the state has

“expresse[d] a quasi-sovereign interest,” such as protecting its citizens from air

pollution. 7 F.3d at 1469 (quotations marks and citation omitted). In crafting its

framework, the dissent relies on factual background discussed in the district court

opinion that was never analyzed by the court of appeals. The “limitations”

- 25 -
discussed by the dissent—whether the State sued in federal court and

affirmatively and expressly asserted parens patriae status—simply were not part

of our parens patriae analysis. And with good reason, it would link the doctrine

to the choice of forum and elevate form over substance. The actual limitation that

Satsky placed on a state’s ability to maintain a parens patriae action is that it

cannot sue to assert the rights of private individuals. This limitation does not

apply here.

While “agency inaction,” Green Forest, 921 F.2d at 1405, or writing a letter

without any formal proceeding before a court or agency, Friends, 382 F.3d at 756

(citing PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610, 618-19 (7th Cir.

1998)), may not be sufficient to establish privity, these are not the facts before us.

DEQ informed Two Elk via letter that its permit had expired for noncompliance.

But Two Elk then initiated a formal proceeding against DEQ before the Council

which culminated in the Council finding that Two Elk had timely commenced

construction. That DEQ defended the action before the Council is of no

consequence. See Restatement (Second) of Judgments § 42(1)(e) (A non-party

may be precluded where the representative “prosecute[d] or defend[ed] the action

with due diligence and reasonable prudence.” (emphasis added)).

The dissent also misreads Friends. The court there never held that an

action must take place in a court to establish privity under the doctrine of parens

patriae. As the dissent observes, that question was never before the court.

- 26 -
Rather, the court “look[ed] to” the CWA to determine whether a State’s action

was “diligent” under the Restatement (Second) of Judgments § 41(1)(d). Friends,

382 F.3d at 759. The court concluded that the focus of the diligence inquiry is

“whether the [State] actions are calculated to eliminate the cause(s) of the

violations.” Id. at 760. In this case, DEQ’s actions were calculated to ensure that

Two Elk’s compliance with the CAA. That some courts have held that 42 U.S.C.

§ 7604(b)(1)(B) requires action in a court does not affect our analysis. We are

applying Wyoming common law preclusion principles, which give preclusive

effect to agency proceedings. We are not determining, and need not determine,

whether a concurrent prosecution in a state agency proceeding bars

commencement of a citizen suit under the CAA.

We do not hold, as the dissent contends, that a state agency’s

administrative adjudication of environmental regulations always creates privity.

As we noted in Satsky, “[t]here is no definition of privity which can be

automatically applied to all cases involving the doctrines of res judicata and

collateral estoppel since privity depends upon the circumstances.” 7 F.3d at 1469

(quotation marks and citations omitted). The circumstances here weigh in favor

of preclusion. The DEQ—the state agency charged by statute with enforcing the

Wyoming Environmental Quality Act and deemed by the Wyoming Supreme

Court to represent the interests of Wyoming in air quality matters—defended an

action concerning Wyoming’s air quality before the Council. Nothing suggests

- 27 -
that the Council acted pro forma; rather the facts suggest that the Council was in

fact concerned about emissions technologies and pollution allocation. Privity is

appropriate here.

Finally, policy factors weigh in favor of preclusion. First, Sierra Club’s

failure to appeal the Council’s 2005 Order and its decision to abandon its appeal

of the Wyoming district court’s March 12, 2009 order support preclusion under

Wyoming law. In Slavens v. Board of County Commissioners, the Wyoming

Supreme Court explained that the appellant’s failure to appeal the state district

court’s decision reviewing an administrative decision weighed in favor of

preclusion. 854 P.2d at 686; see also Kahrs, 901 P.2d at 407 (“[Plaintiff’s] failure

to seek a full judicial review of the board’s decision prohibited her from

instituting any subsequent action in the matter.” (citations omitted)).

In addition, implicit in the Wyoming district court’s holding that Two Elk

did not cease construction is a subsidiary finding that Two Elk commenced

construction in the first instance. As the court explained, the Permit required that

“construction once commenced may not be discontinued for a period of twenty-

four months or more.” Aplt. App. at 159 (emphasis added). In order to determine

whether Two Elk ceased construction, Two Elk must have commenced

construction.

The public policy of finality of judgments also supports our conclusion.

The Wyoming Supreme Court has repeatedly recognized that the doctrines of res

- 28 -
judicata and collateral estoppel are founded upon

the interest held by society in having differences conclusively resolved
in a single action thereby avoiding the vexation and expense which are
associated with piecemeal litigation. The necessity for sustaining this
social interest is the justification for the doctrines of res judicata and
collateral estoppel. . . . These doctrines . . . promote the reliance by
citizens of the state upon courts to settle their disputes and they
conserve judicial resources.

Dowlin v. Dowlin, 162 P.3d 1202, 1207 (Wyo. 2007) (citation omitted). Sierra

Club chose not to intervene in the 2005 and 2007 proceedings before the Council.

It never appealed the Council’s 2005 Order, and it abandoned its appeal of the

Council’s 2007 Order. It now attempts to second guess the position taken by

DEQ and the final decisions made by the Council and the Wyoming district court.

Wyoming’s policy of finality of judgments favors against allowing Sierra Club to

relitigate issues that have already been decided.

AFFIRMED.

- 29 -
10-8032, Sierra Club v. Two Elk

LUCERO, J., dissenting

Because my colleagues expand the well-defined principles of parens patriae to

include preclusion based on state intra-agency proceedings and because they misapply

the doctrine of collateral estoppel, I respectfully dissent.

The majority concludes that the common law applies to citizen suits under the

Clean Air Act and thereby seeks to invoke parens partiae standing. But my colleagues

ignore the Clean Air Act’s impact on common-law principles.1 Even assuming

traditional preclusion doctrines were to apply, the 2005 and 2009 Orders lack preclusive

effect.

I

In determining whether the 2005 Order has collateral estoppel effect, the majority

correctly observes that the Wyoming Supreme Court would look to federal law.

(Majority Op. 17.) I disagree, however, with my colleagues’ understanding of the

1
The majority rejects outright Sierra Club’s argument that the CAA’s plain
language displaces common-law preclusion doctrines, relying on “[n]umerous courts”
that have applied the doctrines in CAA or Clean Water Act (“CWA”) cases. (Majority
Op. 8.) However, these cases assume without deciding that the common law controls the
analysis. See Ellis v. Gallatin Steel Co., 390 F.3d 461, 473-74 (6th Cir. 2004) (applying
res judicata without considering whether the CWA might displace the common law);
Friends of Milwaukee’s Rivers v. Milwaukee Metro. Sewage Dist., 382 F.3d 743, 757-65
(7th Cir. 2004) (same); EPA v. City of Green Forest, Ark., 921 F.2d 1394, 1403-05 (8th
Cir. 1990) (same); Wilder v. Thomas, 854 F.2d 605, 616-21 (2d Cir. 1988) (applying
collateral estoppel without acknowledging the CAA might displace the common law). It
is far from clear that common-law preemption survives 42 U.S.C. § 7604(b)(1)(B) intact.
See Jeffrey G. Miller, Theme and Variations in Statutory Preclusions Against Successive
Environmental Enforcement Actions by EPA and Citizens, 28 Harv. Envtl. L. Rev. 401,
416-25 (2004) (explaining the CAA’s statutory preclusion device within the overall
purpose of encouraging citizen suits).
manner in which federal law applies. My objection primarily concerns the third element

of collateral estoppel: “whether the party against whom collateral estoppel is asserted

was a party or in privity with a party to the prior adjudication.” Brockman v. Wyo. Dep’t

of Family Servs., 342 F.3d 1159, 1166 (10th Cir. 2003) (quotation omitted).

Three analytical frameworks could guide an inquiry into whether Sierra Club was

in privity with the DEQ as to the 2005 Order. Examples of these analyses are set forth in

the case law. The first, articulated in Satsky v. Paramount Communications, Inc., 7 F.3d

1464 (10th Cir. 1993), suggests that parens patriae is an extraordinary doctrine of

standing, which precludes suits only when a state asserts the doctrine in federal court.

The second, used by the Eighth Circuit in EPA v. City of Green Forest, 921 F.2d 1394,

has the most general understanding of parens patriae preclusion.2 The third, exemplified

by the decision of the Seventh Circuit in Friends of Milwaukee’s Rivers v. Milwaukee

Metropolitan Sewage District, 382 F.3d 743, adopts the plain language of the citizen suit

provision, requiring a diligent prosecution to support a determination that a state was

privity with its citizens. Under any of these approaches, the majority’s conclusion that

the 2005 Order has preclusive effect is fatally flawed.

A

I do not quarrel with the majority’s statement that a state is assumed to represent

the interests of its citizens if a state sues another party in a parens patriae suit. Thus, if a

citizen were to sue to redress an identical injury, the citizen suit may be precluded. Cf.

2
The majority appears to interpret Satsky and Green Forest coterminously, but
they are analytically distinct, as I explain below.
-2-
Satsky, 7 F.3d at 1470 (“When a state litigates common public rights, the citizens of that

state are represented in such litigation by the state and are bound by the judgment.”

(citations omitted)); see also Washington v. Wash. State Commercial Passenger Fishing

Vessel Ass’n, 443 U.S. 658, 692 n.32 (1979). My disagreement is with the majority’s

assertion that the DEQ was “acting in its parens patriae capacity.” (Majority Op. 16.)

1

Parens patriae is a standing doctrine that allows states to vindicate their interests in

federal court.3 See New Mexico v. Gen. Elec. Co., 467 F.3d 1223, 1243 n.30 (10th Cir.

2006); see also Richard H. Fallon, Jr., et al, Hart and Wechsler’s The Federal Courts and

the Federal System 261-66 (6th ed. 2009). Although the term has sometimes been used

more generally to refer to actions that a state takes on behalf of its citizens, its boundaries

have never been expanded to include mere defenses a state agency asserts against a

regulated entity appearing before the agency’s adjudicatory branch. To the contrary, case

law demonstrates that the term does not encompass such actions.

Properly applied, the parens patriae doctrine is utilized when a state purports to act

for all of its citizens in litigation, generally before the federal courts. The core purpose of

parens patriae is to extend “special solicitude” to states litigating in federal courts.

Massachusetts v. EPA, 549 U.S. 497, 518-20 (2007). Because the states ceded to the

3
The term may also refer to the common-law concept that the state has a duty to
act as a guardian of children and the mentally disabled. This is the only way in which
Wyoming courts have ever used the term. See, e.g., J.J.F. v. State, 132 P.3d 170, 177
(Wyo. 2006); cf. Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 600 (1982)
(“Th[e] common-law approach, however, has relatively little to do with the concept of
parens patriae standing that has developed in American law.”).
-3-
federal government “[d]iplomatic powers and the right to make war,” it was “to be

expected that upon the [federal courts] would be devolved the duty of providing a

remedy.” Missouri v. Illinois, 180 U.S. 208, 241 (1901). Accordingly, parens patriae

standing is a legal and equitable solution to interstate disputes that could otherwise be

settled only by force, thus federal courts are compelled to entertain such suits.4 This

underlying rationale explains our willingness to give preclusive force to suits prosecuted

by states in federal court. See Satsky, 7 F.3d at 1470. It also explains Satsky’s insistence

that a parens patriae suit is extraordinary, in that a state bringing such a suit must allege a

special injury to its own interests. Id. at 1469.

Moreover, mere enforcement of an agency’s organic statute is not a parens patriae

suit. See United States v. Hooker Chems. & Plastics Corp., 749 F.2d 968, 986-87 (2d

Cir. 1984) (emphasizing that an entity suing as parens patriae must actually purport to act

in such a capacity). Instead, a state must affirmatively assert parens patriae status. In

Satsky, Colorado did so in three ways. First, the governor signed an executive order

permitting an extraordinary enforcement action by the Colorado Department of Health

and Natural Resources. Satsky v. Paramount Commc’ns, Inc., 778 F. Supp. 505, 510 (D.

Colo. 1991), rev’d on other grounds, Satsky, 7 F.3d. at 1464. Second, the initial litigation

was brought by Colorado “as trustee of all natural resources located within its boundaries

4
Although parens patriae generally refers to a state suing in federal court, some
courts have loosely used the term “parens patriae” when referring more generally to the
state’s ability to sue on behalf of its citizens. See, e.g., Friends, 382 F.3d at 759. The
rationale of Friends is discussed below. For the moment, it is sufficient to point out that
we cannot dispose of this case solely on the Friends definition of parens patriae, which
assumes the conclusion we are trying to establish.

-4-
on behalf of and for the benefit of the public.” Id. at 510. Third, the state brought that

round of litigation to term by entering into a consent decree for the express benefit of its

citizens. Id. at 511.

Satsky also articulates the requirement that a state plead an injury to one of its

quasi-sovereign interests. Id. In 1907, the Supreme Court explained that one such quasi-

sovereign interest is a state’s environment:

This is a suit by a state for an injury to it in its capacity of quasi-sovereign.
In that capacity the State has an interest independent of and behind the titles
of its citizens, in all the earth and air within its domain. It has the last word
as to whether its mountains shall be stripped of their forests and its
inhabitants shall breathe pure air.

Georgia v. Tenn. Copper Co., 206 U.S. 230, 237 (1907). One hundred years later, in

Massachusetts, 519 U.S. 497, the Court reiterated this principle and emphasized that in

order to “sue [as] parens patriae” a state should allege an injury that “is one that the State,

if it could, would attempt to address through its sovereign lawmaking powers.” Id. at 519

(quotation and citation omitted). The latter statement from the Court emphasizes, once

again, that simple lawmaking or law enforcement does not amount to a parens patriae

action. It is only after a state has come to the doors of a federal courthouse, and asked to

be admitted to assert its quasi-sovereign interests, that a court may imbue it with parens

patriae status.

Without the limitations articulated in Satsky, any suit whatsoever in which a state

appears as a party, ipso facto, would be a parens patriae proceeding.

2

Satsky leaves no doubt that the Wyoming Department of Environmental Quality’s

-5-
appearance before the Wyoming Environmental Council (both being under the same

statutory umbrella5) could not constitute a proper parens patriae suit. This is so for three

reasons.

First, the suit was not brought in federal court. It was brought before a state

administrative agency. Although federal courts sometimes grant preclusive effect to state

agency proceedings, the parens patriae doctrine is not a matter of comity between the

state and federal judiciaries. Rather it is a doctrine of standing which affords state

officials a platform from which to vindicate their quasi-sovereign interests in federal

court. The 2005 Order is not entitled to the same preclusive effect we afforded the

consent decree in Satsky or the “special solicitude” the Court gave to the state in

Massachusetts because it did not arise from federal litigation.

Second, the DEQ did not assert that it was suing on behalf of the citizens of

Wyoming. Cf. Hooker, 749 F. 2d at 986-87. In fact, the DEQ did not sue at all. Two

Elk sued the DEQ before the Council to end the DEQ’s supervision of its permit, and the

DEQ merely defended the suit before eventually agreeing to settle the matter. Rather

than enforcing the CAA against Two Elk, the DEQ did precisely the opposite: it

relinquished its right to sue. These intra-agency proceedings stand in stark contrast to the

parens patriae actions that we found preclusive in Satsky. Unlike the attorney general in

Satsky, the DEQ never claimed to be acting in a manner that would bind the citizens of

5
The DEQ is an executive branch department, an agency under the Wyoming
Administrative Procedure Act, empowered to enforce the Wyoming Environmental
Quality Act. Wyo. Stat. §§ 16-3-101(b)(i), 35-11-104, -110(a). That act also establishes
the Council to act as the adjudicative body for the DEQ. §§ 35-11-111, -112.
-6-
Wyoming. The 2005 Order approving the settlement states that the DEQ and Two Elk

were seeking an order “binding them” to the terms of the agreement.6 (Emphasis added.)

During the later state court proceedings, the DEQ remarked in passing that its actions

were in the “public interest” and that Sierra Club’s injury was “shared by both the general

public and DEQ.”7 But the assertion of one kind of injury by a specific group of citizens,

combined with a state’s competing obligations to pursue relief for a different kind of

injury, may not amount to preclusion. See Democratic Cent. Comm. of D.C. v. Wash.

Metro. Area Transit Comm’n, 842 F.2d 402, 409-10 (D.C. Cir. 1988). In the case before

us, Sierra Club pled an injury to its environmental interests. What the DEQ considered

were both economic and environmental factors during the permitting process, as required

by its mandate. See Wyo. Stat. § 35-11-102 (defining part of the DEQ’s mission as the

development and use of “air . . . resources of the state”). Applying the foregoing

principles, the conclusion that the DEQ has been acting as parens patriae throughout the

permitting process is unsupportable.

Third, the DEQ’s exercise of sovereign authority was necessarily limited by the

CAA. In expressly creating a federal right of action, the CAA minimizes a state’s need to

assert “quasi-sovereign” interests apart from the federal scheme. Cf. Tenn. Copper Co.,

206 U.S. at 237-38. And although the statute entitles Wyoming to “special solicitude”

6
And a later settlement discussed in the 2007 Order disclaimed any binding effect
on non-parties (“[t]he rights, duties, and obligations contained in this Agreement shall
operate only among [the DEQ and Two Elk]”).
7
This was the basis for the DEQ’s argument that Sierra Club did not have state
standing. The state court rejected this notion, concluding that Sierra Club had standing.

-7-
should it seek to sue in federal court, Massachusetts, 549 U.S. at 518-20, it does not

extend that solicitude so as to require federal courts to give preclusive effect to every

defensive act by an administrative agency that a regulated entity chooses to call a CAA

enforcement action.

By intentionally overlooking the circumscribed view of parens patriae expressed

in Satsky, the majority hopes to create a new rule that a state agency’s administrative

adjudication of environmental regulations always creates privity. This expansion of the

parens patriae doctrine would render citizen suit provisions a dead letter in spite of the

Supreme Court’s admonition against “extraordinary application of the common law of

preclusion” that undermines federal statutes. Taylor v. Sturgell, 553 U.S. 880, 903

(2008).

B

Although Satsky strongly supports the conclusion that Sierra Club cannot be

precluded based on a parens patriae rationale, Sierra Club would still prevail under the

frameworks established by our sister circuits. The Seventh Circuit and the Eighth Circuit

have grappled with the disconnect between the common law and the citizen suit

provisions of the CAA and CWA. Each has adopted a test to determine whether a state

has adequately represented the interests of its citizens and thus established privity.

Compare Green Forest, 921 F.2d at 1403-04, with Friends, 382 F.3d at 758-59; cf. Atl.

States Legal Found., Inc. v. Eastman Kodak Co., 933 F.2d 124, 127 (2d Cir. 1991)

(analyzing the CWA statutory preclusion device without considering the parens patriae

doctrine at all). The majority evaluates Two Elk’s preclusion claim under both Green

-8-
Forest and Friends and concludes that the Council’s 2005 order is preclusive under either

test. I disagree.

1

In Green Forest, the Eighth Circuit considered the estoppel effect of a consent

decree entered into by the EPA and Tyson Foods. See 921 F.2d at 1397, 1403-04.

Citizens filed a CWA suit against Tyson prior to the EPA’s enforcement action. Id. at

1400. The citizen plaintiffs argued that their suit should be allowed to continue despite

the consent decree because the CWA’s preclusion provision only bars citizen suits filed

after the commencement of a prosecution by the EPA or the state. Id. at 1403. The

Eighth Circuit rejected this contention, concluding the citizens’ suit was barred by

common-law estoppel. Id. at 1405.

Green Forest described parens patriae in the most general sense. Although the

cases it relied upon clearly refer to suits brought by states in federal court under parens

patriae as a doctrine of standing,8 the court focused on the EPA’s role as “preeminent”

8
Green Forest’s reliance on these precedents was questionable. For example, the
court relied up on United States v. Olin Corp., 606 F. Supp. 1301, 1305 (N.D. Ala. 1985),
for the proposition that the federal government may have “proper parens patriae” status.
Olin in turn relied upon New Jersey v. New York, 345 U.S. 369, 373 (1953) for that
proposition. 606 F. Supp. at 1305. Yet New Jersey contains no mention of the
possibility that parens patriae is anything other than a doctrine of standing that may be
asserted by states. 345 U.S. at 372 (“[Parens patriae] is a recognition of the principle that
the state, when a party to a suit involving a matter of sovereign interest, must be deemed
to represent all its citizens.” (quotations omitted)). The question of EPA’s standing in
Green Forest or Olin has nothing to do with its representative capacity for citizens. When
the federal government or one of its agencies brings suit, its standing is usually based on
its power, defined by Congress, to redress violations of the laws of the United States.
This may be in tension with courts’ current understanding of Article III standing, but it is
nonetheless axiomatic. See Edward A. Hartnett, The Standing of the United States: How
-9-
enforcer of the CWA “on behalf of all citizens.” Id. at 1404. Once the EPA negotiated a

consent decree, the court held, there was no longer a need for citizen suits. Id.

Nevertheless, the Green Forest court roundly rejected Tyson’s contention that the “EPA’s

decision not to commence an action against it is binding upon the citizens.” Id. at 1405.

Such an interpretation was held impermissible because the CWA “make[s] clear that

agency inaction is precisely the circumstance in which private action is appropriate.” Id.

(citation omitted).

2

In Friends, the Seventh Circuit dealt directly with the interaction between the

citizen suit provisions and common-law preclusion. 382 F.3d at 759; see also St. Bernard

Citizens for Envtl. Quality, Inc. v. Chalmette Refining, L.L.C., 500 F. Supp. 2d 592, 605-

06 (D. La. 2007) (adopting the Friends approach). In determining the preclusive effect of

a settlement agreement between Wisconsin and a polluter, the Seventh Circuit turned first

to common-law preclusion. Starting from the assumption that parens patriae sometimes

places the state in privity with its citizens, the court nonetheless noted that a third party

may not be bound if “the representative failed to prosecute or defend the action with due

diligence and reasonable prudence.” Friends, 382 F.3d at 759 (quoting Restatement

(Second) of Judgments § 42(1)(e) (alterations omitted)).9

Focusing on this aspect of common-law preclusion, Friends determined that the

Criminal Prosecutions Show that Standing Doctrine is Looking for Answers in all the
Wrong Places, 97 Mich. L. Rev. 2239, 2247-51 (1999).
9
The Wyoming Supreme Court has favorably cited the Restatement (Second) of
Judgments on matters of preclusion. See, e.g., Fuentes v. Jednat, 229 P.3d 949, 951-52
(Wyo. 2010).
- 10 -
common law and the statute dovetail neatly: the central question becomes whether a state

diligently prosecuted a matter. Friends, 382 F.3d at 759. A citizen suit is barred only if

the state has initiated a “judicial action . . . capable of requiring compliance with the Act

and [which] is calculated to do so.” Id. (quotation omitted). As the majority correctly

notes, an agency’s “prosecutorial strategy” need not be the same as the citizen’s.

(Majority Op. 19 (quoting Karr v. Hefner, 475 F.3d 1192, 1197 (10th Cir 2007)).

This approach balances our duties to give effect to state judgments under the Full

Faith and Credit Statute, 28 U.S.C. § 1738, and the need to preserve the integrity of the

federal statutory scheme. As one court has put it:

[the Friends approach] does not give the polluter a pass simply because it
has reached a settlement with a government enforcement agency. On the
other hand, it does not require a showing of immediate, perfect compliance
when the polluter and a government enforcement agency have reached a
settlement that puts into place a complex remediation plan.

St. Bernard Citizens, 500 F. Supp. 2d at 606. Although the Friends framework grants

solicitude to state agency decisions, it also protects the ability of citizen suits to

“supplement” governmental efforts to abate pollution. Gwaltney of Smithfield, Ltd. v.

Chesapeake Bay Found., Inc., 484 U.S. 49, 60 (1987). Because the CAA provides a

statutory guide to cases in which a diligent prosecution has taken place, I would adopt the

Friends test and apply it to the facts before us.

3

A faithful application of Friends leads inexorably to the conclusion that Sierra

Club was not in privity with the DEQ. The intra-agency action to which the majority

would grant preclusive effect was initiated by Two Elk before the Wyoming

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Environmental Council, defended by the Wyoming Department of Environmental

Quality, and settled through that same agency’s proceedings. My colleagues determine

that, under Friends, the DEQ diligently prosecuted the action below and the 2005 Order is

preclusive. But Friends adopted the statutory test in defining privity. 382 F.3d at 759.

The statute requires a state to have “commenced and [be] diligently prosecuting a civil

action in a court of the United States or a State to require compliance with the standard,

limitation, or order.” 42 U.S.C. § 7604(b)(1)(B) (emphasis supplied).

The Seventh Circuit did not have to consider the requirement in the CWA that the

action be commenced in a court because the settlement at issue involved an adjudication

before a Wisconsin state court. Friends, 382 F.3d at 750. The majority ducks the issue

because it contends that it is not applying the statute. (Majority Op. 19 n.1.) But Friends

is predicated on that statutory language. The majority’s claim that it is relying on Friends

and its simultaneous disavowal of the very statutory language on which Friends is based

is befuddling.

Fidelity to Friends requires a determination of whether a “judicial action is capable

of requiring compliance with the Act and is calculated to do so.” 382 F.3d at 759

(quotations omitted). The DEQ’s actions fail this test. First and foremost, there was no

“judicial action.” Agency decisions may have preclusive effect under certain

circumstances. See Slavens v. Bd. of Cnty. Comm’r for Uinta Cnty., 854 P.2d 683, 685

(Wyo. 1993) (explaining under which circumstances preclusion by an agency decision is

appropriate). But the Friends approach to the CAA provides a guide to when preclusion

is appropriate, and unambiguously requires adjudication in a court. “All but two of the

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more than thirty courts asked to rule that an administrative tribunal is a ‘court’ for the

purposes of [preclusion under the CAA or similar statutes] have refused to do so.”10

Miller, supra, at 437. Were the Wyoming Supreme Court to look to federal law, then, it

would likely adopt this majority rule.

But even assuming, arguendo, that Friends permits an agency’s decision to be

given preclusive effect, the DEQ’s purported enforcement actions in this case were not

“diligent prosecutions” as that phrase is generally understood. Proceedings were initiated

by Two Elk upon the DEQ’s notification to the company that its permit expired. At a

2007 hearing, a representative of the DEQ explained that such letters are merely

notifications and not any sort of “affirmative action in terms of repealing, revoking,

renewing a permit.” The DEQ’s understanding of the role of its letter as non-

prosecutorial is supported by the reasoning of the Seventh Circuit—as that court noted,

“writing a letter would hardly be described as commencing or prosecuting an action.”11

10
The two outliers are Gardeski v. Colonial Sand & Stone, Co., Inc., 501 F. Supp.
1159 (S.D.N.Y. 1980) called into doubt by Friends of the Earth v. Consol. Rail Corp.,
768 F.2d 57 (2nd Cir. 1985), and SURCCO v. PRASA, 157 F. Supp. 2d 160 (D.P.R.
2001). The Third Circuit also suggested such a contrary approach, see Baughman v.
Bradford Coal Co., Inc., 592 F.2d 215, 217-18 (3d Cir. 1979), but has never adopted the
minority rule.
11
The majority points to the procedural history of this case as supporting a finding
of estoppel. (Majority Op. 23 (citing Slavens, 854 P.2d at 686).) It notes that Sierra Club
did not even attempt to intervene prior to the 2007 hearings, and that, after filing its suit
under the Wyoming Administrative Procedure Act, it withdrew its petition for certiorari
with the Wyoming Supreme Court and elected to file a federal suit. (Id.) Although I
agree that failure to prosecute a suit generally supports a finding of preclusion under
Wyoming law, this factor is trumped by the limitations on preclusion found in the CAA
and acknowledged in Friends. Sierra Club’s actions actually prove the state action was
not preclusive. As Sierra Club points out, it did not intervene at first because it thought
the state would diligently prosecute. It was only when it became clear the state would not
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Friends, 382 F.3d at 756 (quotations omitted). Because the DEQ did not prosecute at all,

it could not have prosecuted diligently and the settlement is not entitled to preclusive

effect under Friends.

4

For similar reasons, Sierra Club is not precluded from bringing the present action

even under the approach in Green Forest. In that case, the court squarely rejected the

notion that declining to sue could curry preclusive effect. Green Forest, 921 F.2d at

1406. Further, Green Forest relied heavily upon the EPA’s “preeminent role” as the

enforcer of the CWA. Id. at 1404. Its conclusions do not intuitively apply in this case, in

which the EPA was not involved and the settlement amounted simply to a stipulation of

facts. Additionally, although Green Forest relied predominantly on the common law,

there must yet be a showing that the state was granted the authority to act on behalf of its

citizens’ interest. See Restatement (Second) of Judgments § 41(1)(d) (1982); Democratic

Cent. Comm., 842 F.2d at 409-10. There has been no such showing.

Indeed, Sierra Club persuasively argues that the DEQ did not act in the citizen

plaintiffs’ interests. There is no suggestion that Sierra Club shares any proprietary

interest with Wyoming or the DEQ, which is generally required for a showing of privity.

See Wyo. Med. Ctr. v. Wyo. Ins. Guar. Ass’n, 225 P.3d 1061, 1065 (Wyo. 2010). The

group argued vigorously that its interests do not align with the agency’s and established,

diligently prosecute that Sierra Club had to step in. And the citizen plaintiffs’ decision to
abandon the state court proceeding was a sound choice given that they faced a high
burden of proof in those proceedings, which, as discussed infra, is different for citizen
suits under the CAA and militates against a finding of preclusion.
- 14 -
based on the DEQ’s admissions, that the agency’s objectives encompass economic goals

as well as environmental ones. Sierra Club emphasized that the DEQ raised, and the

Council considered, matters such as the crowding out of other businesses by Two Elk’s

slow or nonexistent construction process. Further the group pled below that it is a

national organization, whose interests could not be fully represented by Wyoming during

the proceedings before the Council.12

Thus, this case is unlike Karr, 475 F.3d 1192, in which the agency and the

plaintiffs agreed the defendant was not compliant, but disagreed on the proper remedy to

pursue. See id. at 1198. Sierra Club and the DEQ were at antipodes: one advocated

prosecution and the other determined prosecution was not necessary. When courts have

held a suit to be precluded by settlement or consent decree, the preclusive orders have

contained “substantive provisions that on their face [were] directly designed to address”

serious violations, St. Bernard Citizens, 500 F. Supp. at 606, or resulted in “more

[compliance] than [p]laintiffs sought to achieve on their own,” Karr, 475 F.3d at 1198.

However, the 2005 Order confirms a settlement in which the agency and the company

simply agreed that Two Elk was compliant with its permit. The order was no more than a

stipulation to certain facts. The DEQ never “prosecuted” any violations by Two Elk

because it did not believe a violation was taking place. I can find no instance in the case

12
The majority concludes that this argument was waived. This is a strained and
harsh reading of the record. Sierra Club explicitly pled that it was a national organization
with members outside Wyoming. It further argued that the DEQ did not represent its
interests. Sierra Club demonstrably preserved the issue of whether it was in privity with
the DEQ; our waiver rules do not require a party to raise every possible sub-argument
supporting its principal objection in order to preserve that position.
- 15 -
law of such a stipulation barring a citizen suit.

II

Under Wyoming law, collateral estoppel does not apply when the proceedings

sought to be estopped utilize a lower burden of proof than that utilized in the first

proceeding. Elliott v. State, 247 P.3d 501, 503 (Wyo. 2011); Doles v. State, 163 P.3d

819, 823 (Wyo. 2007). Because of the dichotomous standards in the proceedings below,

the 2009 Order cannot be preclusive.

In the state court proceeding, under a deferential substantial evidence standard,

Sierra Club had the burden of showing “the agency’s conclusions were contrary to the

overwhelming weight of the evidence in the record as a whole.” Goodman v. Voss, 2011

WL 667968, at *11 (Wyo. Feb. 25, 2011) (quotation omitted). In federal court, Sierra

Club would only have to show by a preponderance of the evidence that Two Elk was not

in compliance with the Act. Cf. Sierra Club v. Pub. Serv. Co. of Colo., Inc., 894 F. Supp.

1455, 1458 (D. Colo. 1995). There is a “significantly heavier” burden in the former case

than in the latter. Elliott, 247 P.3d at 503. Just as an “acquittal on criminal charges does

not prove that the defendant is [dispositively] innocent” in related civil proceedings,

Doles, 163 P.3d at 823 (quotation omitted), the finding that there was substantial

evidence supporting the Council’s conclusion that Two Elk continued building does not

preclude Sierra Club from showing otherwise by a preponderance of the evidence.

III

Because I cannot concur with the majority’s understanding of federal or Wyoming

law, I respectfully DISSENT.

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