State Water Control Board v. Smithfield Foods, Inc.

Present: Carrico, C.J., Lacy, Keenan, Koontz, Kinser, and
Lemons, JJ.

STATE WATER CONTROL BOARD, ET AL.

v. Record No. 000736 OPINION BY JUSTICE ELIZABETH B. LACY
March 2, 2001
SMITHFIELD FOODS, INC.

FROM THE CIRCUIT COURT OF ISLE OF WIGHT COUNTY
Glen A. Tyler, Judge

This appeal arises from an enforcement action brought by

the State Water Control Board and the Director of the

Department of Environmental Quality (collectively "the Board")

against Smithfield Foods, Inc. for alleged violations of a

permit issued pursuant to both state and federal law.

Following a successful action by the United States

Environmental Protection Agency (EPA) in federal court for

violations of the same permit, the Circuit Court of Isle of

Wight County sustained Smithfield's plea of res judicata and

dismissed the Board's enforcement case. For the following

reasons, we will affirm the judgment of the trial court

because privity exists between the Board and the EPA under the

facts of this case.

I.

Virginia's State Water Control Law, Code §§ 62.1-44.2 to

–44.34:28, prohibits the discharge of any pollutants into

Virginia's waters unless in compliance with a Virginia

Pollutant Discharge Elimination System (VPDES) Permit. Code
§ 62.1-44.5. Similarly, the federal Clean Water Act (CWA)

requires a National Pollutant Discharge Elimination System

(NPDES) Permit in order to discharge pollutants into any

navigable waters in the United States. 33 U.S.C. § 1342(a).

The CWA and federal regulations allow a state program to

operate a discharge elimination system program in place of the

federal program, provided that the state program is authorized

under state law and has standards that are at least as

stringent as the federal ones. 33 U.S.C. § 1342(b) & (c)(1);

40 C.F.R. § 122.1(a)(2).

In 1975, Virginia's program was approved by the EPA

Administrator, and, pursuant to 33 U.S.C. § 1342, the EPA

suspended its permitting program in the state. 40 Fed. Reg.

20,129 (May 8, 1975). Thus, only the Board operates a

pollutant discharge elimination system program in Virginia.

Under this statutory scheme, a permit issued by Virginia

serves as both a VPDES and a NPDES permit. The Board has the

primary authority to enforce this dual permit; however, the

CWA expressly reserves the EPA's right to pursue its own

enforcement actions with regard to such permit. 33 U.S.C.

§ 1342(i).

Smithfield was first issued a permit that regulated the

discharge of wastewater into the Pagan River in 1986. In

1988, the Board developed a "Policy for Nutrient Enriched

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Waters" (Policy) that imposed more stringent limitations on

phosphate discharges than required by the CWA. The Board

modified Smithfield's permit in 1990 to reflect the new

standards under the Policy. Smithfield filed administrative

appeals challenging the new standards in both the Policy and

the 1990 permit. To resolve their dispute, the Board and

Smithfield negotiated an administrative order (Order) in March

1990 that authorized Smithfield to discharge phosphorus in

excess of the limitations in the permit for a specified period

of time. 1 The Board amended the Order on several occasions

over the course of the next six years, each time granting

Smithfield an extension for compliance. The EPA did not

engage in any of these proceedings.

The EPA informed the Board in August 1996 that it

intended to file suit against Smithfield in federal court and

invited the Board to join in that litigation. The Board

declined to join in the EPA's enforcement activity and instead

filed this suit in the Circuit Court of Isle of Wight County

to enforce violations of the Order and portions of the permit

unrelated to the Order.

1
These facts and others not at issue in this case are
related in exacting detail in opinions from prior proceedings.
See United States v. Smithfield Foods, Inc., 191 F.3d 516 (4th
Cir. 1999), cert. denied, ___ U.S. ___, 121 S.Ct. 46 (2000);
United States v. Smithfield Foods, Inc., 965 F. Supp. 769

3
 In December 1996, while the Board's state action was

pending, the EPA filed its federal action. The United States

District Court for the Eastern District of Virginia found that

the Order negotiated between the Board and Smithfield was not

binding on the EPA and that Smithfield had engaged in numerous

violations of its permit. 2 The United States Court of Appeals

for the Fourth Circuit affirmed the finding of the district

court that Smithfield was liable. United States v. Smithfield

Foods, Inc., 191 F.3d 516, 519 (4th Cir. 1999), cert. denied,

___ U.S. ___, 121 S.Ct. 46 (2000).

Smithfield filed a plea in bar in the state action,

asserting that the Board's enforcement action was now barred

by the doctrine of res judicata. 3 The Board argued that res

judicata did not apply because one of the essential elements

of that doctrine, privity, did not exist between the Board and

the EPA in the federal action. The circuit court found that

(E.D. Va. 1997); Treacy v. Smithfield Foods, Inc., 256 Va. 97,
500 S.E.2d 503 (1998).
2
The federal district court concluded that the Order did
not modify the 1992 permit because Smithfield never followed
the procedures required to modify a permit, the Virginia
statute which granted the Board authority to enter the Order
did not authorize permit modification by the Board, and the
EPA was not a party to the Order and did not consent to be
bound by the Order. 965 F. Supp. at 787-89.
3
The federal district court's final opinion was rendered
August 8, 1997. Smithfield filed its plea in bar on August
12, 1997. The Fourth Circuit rendered its opinion on
September 14, 1999. The state trial court sustained
Smithfield's plea in bar on January 5, 2000.

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the two agencies were in privity "insofar as they seek to

enforce the terms of Smithfield Foods' NPDES Permit" and

granted Smithfield's plea in bar. It is from this decision

that the Board appeals.

II.

Under the common law doctrine of res judicata, a final

judgment on the merits of a claim precludes the parties from

further litigation based on that claim. The doctrine protects

litigants from multiple lawsuits, conserves judicial

resources, and fosters certainty and reliance in legal

relationships. Bill Greever Corp. v. Tazewell Nat'l Bank, 256

Va. 250, 254, 504 S.E.2d 854, 856 (1998). The doctrine

applies unless specifically abrogated by statute. We accord

the same preclusive effect of res judicata to foreign

judgments as do courts in the foreign jurisdiction.

Nottingham v. Weld, 237 Va. 416, 419, 377 S.E.2d 621, 622-23

(1989). 4 To establish the defense of res judicata, the

proponent of the doctrine must establish identity of the

remedies sought, identity of the cause of action, identity of

the parties, and identity of the quality of the persons for or

against whom the claim is made. Balbir Brar Assocs. v.

4
In this case, whether federal or state law is used to
determine the existence of privity is immaterial, as the tests
are virtually identical. Compare Andrews v. Daw, 201 F.3d

5
Consol. Trading & Servs. Corp., 252 Va. 341, 346, 477 S.E.2d

743, 746 (1996).

The only element of res judicata at issue in this case is

the identity of the parties. Although the Board was not a

party to the federal action, the doctrine of privity extends

the preclusive effect of the prior judgment to the Board if

the Board was in privity with the EPA with respect to the

prior action. Smith v. Ware, 244 Va. 374, 376, 421 S.E.2d

444, 445 (1992).

There is no single fixed definition of privity for

purposes of res judicata. Whether privity exists is

determined on a case by case examination of the relationship

and interests of the parties. The touchstone of privity for

purposes of res judicata is that a party's interest is so

identical with another that representation by one party is

representation of the other's legal right. Nero v. Ferris,

222 Va. 807, 813, 284 S.E.2d 828, 831 (1981); Storm v.

Nationwide Mut. Ins. Co., 199 Va. 130, 134-35, 97 S.E.2d 759,

762 (1957). The question in this case, then, is whether the

interests of the EPA and the Board are so identical that the

legal right advanced by the EPA in its federal action is the

same legal right the Board seeks to vindicate here.

521, 524-25 (4th Cir. 2000), with Dotson v. Harman, 232 Va.
402, 404-05, 350 S.E.2d 642, 644 (1986).

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 In addressing this question, we distinguish between the

identity of the legal interests advanced and the identity of

the cause of action; that is, whether the Board and the EPA

sought to enforce the same provisions of the permit. Though

identity of the claim or cause of action is an essential

element of res judicata, that issue is not before us. The

Board and Smithfield agreed before the trial court that the

only issue to be decided for purposes of res judicata was that

of privity, and that is the only assignment of error presented

to this Court. Therefore, in resolving the issue before us,

we assume identity of the cause of action, which in this case

means that the violations sued for and adjudicated in the

federal case are the same as those presented in this

enforcement action. Based on this assumption, we turn to the

parties' arguments regarding the privity issue.

The Board asserts that privity does not exist because its

interests in protecting the waters of the Commonwealth, and

thus the legal rights it seeks to protect, are grounded in

state constitutional and statutory law, Article XI of the

Virginia Constitution and the State Water Control Law, whereas

the interests of the EPA are founded in the CWA. The Board

argues that this separation in the source of the interests and

authority for enforcing those interests, along with the

reservation of the EPA's enforcement rights in the CWA,

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establishes that the interests and rights of the Board and the

EPA are independent and precludes privity between the Board

and the EPA. 5 The Board also asserts that there was no unity

of interest or legal right because the Board and the EPA did

not share a subjective intent to enforce the permit together

and did not coordinate their enforcement efforts. We disagree

with the Board.

Although the interests of the Board and the EPA in

enforcing clean water requirements may be distinct in the

abstract because the authority to enforce such requirements is

grounded in different legislative enactments, the salient fact

in this case is that the interests and rights of both the

entities are vested in a single permit. Two sovereign powers,

the Commonwealth and the federal government, agreed that

effective protection of their separate but mutual interests in

clean water could be realized by qualifying the state

regulatory program as provided in the CWA and thereby agreeing

that the state program would be the entity issuing the permits

designed to protect water quality. Even though, in the

abstract, the state and federal government could each

administer its own program to protect water quality, they

5
To the extent this argument is intended to assert that
the CWA was a "countervailing statutory policy" precluding the
application of the doctrine of res judicata, that argument was

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chose to participate in this joint endeavor. The ability of

both the Board and the EPA to undertake enforcement

activities, including enforcement of Smithfield's permit, does

not override the joint undertaking based on the agreement that

the permit issued by the Board be the mechanism for protection

of the separate but mutual interests of the two sovereign

governments. Thus they "share more than an abstract interest

in enforcement." United States v. ITT Rayonier, Inc., 627

F.2d 996, 1003 (9th Cir. 1980).

An examination of the statutes and regulations governing

the issuance of permits by the Board reinforces the mutuality

of the EPA and the Board's interest or legal right in the

permit. A permit issued by the Board pursuant to the CWA is

deemed to comply with the other provisions of the Act and

allows enforcement of the NPDES permit by the Board. 33

U.S.C. § 1342(b), (c) & (k). Furthermore, federal regulations

regarding the EPA's permitting requirements describe the

things a state "must do to obtain approval to operate its

program in lieu of a Federal program." 40 C.F.R.

§ 122.1(a)(2) (emphasis added).

The Virginia regulations implementing the State Water

Control Law provide that the VPDES permit "is equivalent to an

rejected in United States v. ITT Rayonier, Inc., 627 F.2d 996,
1002 (9th Cir. 1980).

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NPDES permit," 9 VAC 25-31-10, that such permits are issued

"pursuant to the Clean Water Act and the State Water Control

Law," 9 VAC 25-31-20, and that compliance with the permit

"constitutes compliance, for purposes of enforcement, with the

[State Water Control] law and with . . . the CWA." 9 VAC 25-

31-60.

There can be no question that by qualifying the state's

water quality protection program under the CWA, the Board and

the EPA determined that their interests in protecting the

quality of water in Virginia would be protected by the permits

issued by the Board pursuant to this joint program. Thus, the

Board and the EPA share an identity of interest in the permit

issued to Smithfield in this case such that the Board's legal

right was represented by the EPA in the federal action when

the EPA sought to enforce the provisions of the permit.

This conclusion is consistent with the federal court

cases cited to us which considered the issue of res judicata.

In Harmon Industries, Inc. v. Browner, 191 F.3d 894 (8th Cir.

1999), the United States Court of Appeals for the Eighth

Circuit considered whether res judicata applied to an action

filed by the EPA to enforce provisions of the federal Resource

Conservation and Recovery Act (the RCRA), 42 U.S.C. §§ 6901 –

6992k. Although the res judicata holding was an alternative

holding of the trial court, the Court of Appeals nevertheless

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addressed the issue and upheld the trial court's conclusion

that the doctrine applied to preclude the EPA's action.

Applying traditional privity analysis, the Court of Appeals

concluded that the state "advanced the exact same legal right

under the statute as the EPA" because the RCRA did not allow

the EPA an independent enforcement action and because the

state action had the same force and effect as a federal

enforcement action. Harmon, 191 F.3d at 903.

This conclusion did not establish the bright line rule

suggested by the Board that privity exists only when the EPA

does not have independent enforcement powers and that if such

independent power exists, privity is precluded. In fact, in

Rayonier, the Ninth Circuit Court of Appeals specifically

stated that the "existence of concurrent enforcement powers

does not per se negate the application of res judicata

principles." 627 F.2d at 1001. In that case, the appeals

court, again applying traditional privity analysis, held that

privity existed between the EPA and the state enforcement

authority regarding the enforcement of a state-issued permit

pursuant to the CWA. Id. at 1003.

The thrust of these federal cases is, simply, that

whether privity exists between the parties requires a case by

case determination in which traditional principles of the

doctrine are applied. The existence of dual enforcement

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powers alone neither compels nor precludes a finding of

privity.

Finally, the Board's assertions that there was no privity

because there was no intent by the parties to be in privity

when pursuing their separate enforcement actions are

unavailing. Privity does not require a shared subjective

intent by the parties. Harmon, 191 F.3d at 903. Privity is

an objective determination based upon the specific

circumstances of each case. Either the parties share an

identity of interest or they do not. Furthermore, the Board's

argument that there could be no mutuality of interests in this

case because the EPA did not seek to enforce the provisions of

the Order and because the federal court specifically found

that the EPA was not bound by the terms of the Order is not

relevant here. As we have said, these arguments relate to the

issue of identity of claim or cause of action, an issue not

before us in this appeal. The relevant interests for purposes

of privity in this case are those represented by the permit —

the protection of the water quality.

Accordingly, for the above reasons, we will affirm the

judgment of the trial court sustaining Smithfield's plea of

res judicata and dismissing the Board's enforcement action.

Affirmed.

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