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
2
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.
4
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).
6
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
10
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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