Case Title: State Water Control Board v. Smithfield Foods

Citation: 

Docket Number: 000736

State: virginia

Court: Virginia Supreme Court

Date: 2001-03-02T00:00:00Z

Document:
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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