United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ Nos. 96-3654/3919/4220

___________ Comfort Lake Association, Inc., *
* Plaintiff - Appellant/ * Cross Appellee, *
* Appeals from the United States
v. * District Court for the
* District of Minnesota. Dresel Contracting, Inc.; Fain * Companies, *
* Defendants - Appellees/ * Cross Appellants. *

___________ Submitted: October 22, 1997 Filed: March 5, 1998

___________ Before McMILLIAN, LOKEN, and HANSEN, Circuit Judges.

___________ LOKEN, Circuit Judge. Comfort Lake Association, Inc. (“Comfort Lake”), filed this citizen suit seeking in junctive relief, civil penalties, and costs and attorney’s fees against Drese l Contracting, Inc., and Fain Companies (“Dresel and Fain” ) for alleged violations of the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251-1387, commonly known asThe HONORABLE RICHARD H. KYLE, United States District Judge for the 1 District of Minnesota. The HONORABLE ANN D. MONTGOMERY, United States District Judge 2 for the District of Minnesota.
-2- t he Clean Water Act. The district court initially denied Dresel and Fain’s motion for 1

su mmary judgment, rejecting their contention that the Minnesota Pollution Contro l Agency (“MPCA”) had commenced and was diligently prosecuting an administrative enforce ment

action that barred this citizen suit. See 33 U.S.C. § 1319(g)(6)(A)(ii)

. Ho wever, the court later dismissed the action as mooted by MPCA’s subsequen t 2 enforcement

actions and denied Comfort Lake an award of costs and attorney’s fees. Comfort Lake appeals; Dresel and Fain cross appeal the initial ruling. We conclude the claim for injunctive relief is moot, the cla im for civil penalties is precluded by MPCA’s enforcement

action, and the district court did not abuse its discretion in denyin g attorney’s fees. Accordingly, we affirm.

I. Background.

The t iming of the various activities underlying this dispute is significant. In the Fall of 1994, MPCA issued Dresel and Fain a Nation al Pollution Discharge Elimination System (“ NPDES”) permit for construction of a Wal-Mart store in Forest Lake , Minnesota. The permit required erosion and sediment control facilities because run-off of pollutants from th e construction site threatened the water quality of nearby Comfort Lake and its tributarie s. After investigating complaints, MPCA sent Dresel and Fain a warning le tter on December 20, 1994, noting permit violations. Dresel and Fai n responded in early Janua

ry 1995, claiming to have properly addressed these problems.

On January 31, Comfort Lake, a non-profit association dedicated to protectin g the lake and its tributaries, issued a notice of intent to sue Dresel an d Fain over the same NPDES permit violations noted in MPCA’s December 20 letter. Under the Clean-3-

Water Act, plaintiff m

ust give such a notice of intent to sue to the Administrator of the Environmental Protection Agency, the aff ected state agency, and the alleged violator at least sixty days before commencing a citizen suit. See 33 U.S.C. § 1365(b); Hallstrom v. Tillamook Count

y , 493 U.S. 20 (1989). On April 3, Comfort Lake filed this citizen suit under 33 U.S.C. § 1365(a)(1).
Meanwhile, on February 13, MP CA again inspected the construction site, found contin uing violations, and issued a Notice of Violation to Dresel and Fain. The y responded that the violations were remedied, but after another insp ection, MPCA issued

a follow-up letter citing specific permit violations and demanding, within ten days, “a detailed schedule for cor

recting these deficiencies.” MPCA issued a second Notice of Violat ion on May 10, advising Dresel and Fain that the MPCA Board would consider issuing an administrative cease and desist order at its May 23 meeting. On May 19 , Dresel and Fain repo rted full compliance with the permit. MPCA promptly inspected, and a M ay 22 internal agency memorandum states that the violations had indeed been corrected.
Dresel and Fain completed store constr uction in November 1995 and applied for termination of the NPDES permit. MPCA terminated the permit on April 11, 1996

. MPCA staff negotiated and then proposed to the agency Board a Stipulation Agreement requiring payment of $12,203 in civil penalties for all past violations of the permit , including $6,100 payable to the C ity of Forest Lake for “a diagnostic study of Comfort Lake.” On May 21, 1996, MPCA issued its thirty-four page Findings of Fact , Conclus ions of Law and Order approving the Stipulation Agreement over Comfort Lake’s opposition. The Stipulation Agreement recites that it
covers all alleged NPDES/SDS Permit violations that occurred at the WalMart constructi on site and that were known by MPCA as of the effective date of this Agreement. The alleged violations are considered pas t violations that have been satisfactorily resolved or corrected. This-4-

Agreement contains no remedial or corrective action r equirements because construction at the Wal-Mart site has been completed. The NPDES/SDS Permit has bee n terminated; thus, there is no likeliho od that NPDES/SDS Permit violations will recur at the Wal-Mart site.

Dresel and Fain then renewed their motion for summary judgment. The district court granted that motion, and in a separate order denied Comfort La ke an award of costs and attorney’ s fees. These appeals followed. Broadly stated, the issues are whethe r MPCA’s enforcement actions prec lude Comfort Lake’s claims for injunctive relief and civil penalties, and whet

her the district court abused its discretion in denying an award of costs and attorney’s fees.

II. Is the Claim for Injunctive Relief Moot?

Th e doctrine that federal courts may not decide moot cases “derives from th e requirement of Article III of the Constitution under whi ch the exercise of judicial power depends upon the existence of a case or controversy.” Liner v. Jafco, Inc. , 375 U.S

. 301, 306 n.3 ( 1964). A case may become moot at any time. “[I]t is not enough that a dispute was very much alive when suit was filed . . . . The parties must c ontinue to have

a ‘personal stake in the outcome’ of the lawsuit.” Lewis v. Continental Bank Corp. , 494 U.S. 472, 477-78 (1990).
A claim for injunctive relief may become moot if challenged conduc t permanently

ceases
. When the alleged violation underlying a Clean Water Act citizen suit cease s while the suit is pending, “[l]ongstanding principles of mootness . . . prevent th e maintenance of suit when there is no reasonable expectation that the wrong will b e repeated.” Gwaltney of Smithfield v. Chesapeake Bay Found., Inc. , 484 U.S. 49, 66 (1987) (quotation omitted). The district court concluded that Comfort Lake’s claim for injunctive relief became moot when Dresel and Fain’s NPDES permit terminated and MPCA approved the Stipulation Agreement. We agree.-5-

At the o utset, we address the applicable mootness standard. Comfort Lak e argues tha t Dresel and Fain must prove it is “ absolutely clear that the allegedl y wrongful behavior could not reasonably be expected to recur.” But that is the test when

a defen dant claims that its voluntary action has mooted a controversy. See Unite d States v. Concentrated Phosphate Export Ass’n , 393 U.S. 199, 203 (1968); Unite d State s v. W.T. Grant Co. , 345 U.S. 629, 632 (1953). There was nothing voluntar y about Dresel and Fain’s compliance activities in this case. They were undertaken after the t hreat of enforcement action by MPCA. Moreover, the actions which allegedl y
mo oted the citizen suit -- termination of the permit and approval of the Stipulatio n Agreement -- are actions of MPCA, not Dresel and Fain. MPCA’s determination that “there is no likelihood” violations will recur is entitled to deference. In thes e circumstances, we agree with the Second Circuit that the claim for injunctive relief is

moo t unless Comfort Lake proves “there is a realistic prospect that the violation s allegedin [its] complaint will continue notwithstanding” the permit termination an d Stipulation Agreement. A

tlantic States Legal Found., Inc. v. Eastman Kodak Co. , 933 F.2d 124, 127 (2d Cir. 1991); see Orange Env’t, Inc. v. County of Orange , 923 F. Supp. 529, 538-39 (S.D.N.Y. 1996).
Turning to the merits of this issue, Comfort Lake argues there are material fact questi ons whether store construction is complete and the NPDES permit terminated

. Howeve r, Comfort Lake has no evidence to contradict the Stipulation Agreemen t recitals to th is effect. Therefore, it has not met its burden to rebut the factua l underpinni ngs of a well-supported motion for summary judgment. See Anderson v

. Liberty Lobby, Inc. , 477 U.S. 242, 250 (1986). Comfort Lake further argue s Dresel and Fainwrongfully procured the permit’s termination by misstating that the constructionW e deny Comfort Lake’s motion to supplement the record on appeal with 3 addit ional documents relating to permit termination because these documents, i f relevant, should have been placed in the district court record. See Crawfo rd v. Runyon , 79 F.3d 743, 744 (8th Cir. 1996).
-6- site w as properly stabilized. But there is no record support for this contention. 3 Moreover, because the permit expressly provided that it would not-7-

terminate until “the site has undergone fin al stabilization,” MPCA obviously concluded in April 1996 that such stabilization had been achieved.
Finally, Comfort Lake argues that permit termination did not moot its claim for injunc tive relief because Dresel and Fain constructed three settling ponds that ar e discharging pollutants into C omfort Lake and its tributaries without an NPDES permit, and because Dresel and Fain are likely to violate their umbrella NPDES permit at other construction sites. The answer to this contention is that these issues are not prope r subjects of the

lawsuit because Comfort Lake’s notice of intent to sue referenced only the alleged permit violations discussed in MPCA’s December 20, 1994, warning letter, violations relating to the Wal-Mart store construction. A citizen suit is limited t o violations that

are closely related to and of the same type as the violations specified in the notice of intent to sue. See Public Interest Research Group of N.J., Inc. v. Hercules, Inc. , 50 F.3d 1239, 1250 (3d Cir. 1995); 40 C.F.R. § 135.3.

III. Is the Claim for Civil Penalties Precluded?

Comfort Lake’s complaint asked the court to impose civil penalties of $25,000 per day for each Clean Water Act violation. Contending that Dresel and Fa in’s payment of $12,203 in civil penalties under the MPCA Stipulation Agreement is an insufficient sanction for their permit violations, Comfort Lake argues that its cla im for civil penalties should be a llowed to proceed even if its claim for injunctive relief is moot. When a claim for injunctive relief becomes moot, a r elated claim for money relief is not mooted “as long as the parties have a concrete interest, however small, in the outcome of th e lit igation.” Ellis v. Brotherhood of Ry., Airline & S.S. Clerks , 466 U.S. 435, 44 2 (1984).-8-

AClean Water Act citizen suit, including any claim for civil penalties, must be based upon on-going violations, “that is, a reasonable like lihood that a past polluter will continue to pollute in th e future.” Gwaltney , 484 U.S. at 57. Despite this limitation, a numberof circuits have concluded that, even if a polluter’s voluntary permanen t cessation of the alleged violations moots a citizen suit claim for injunctive relief, it does not moot a related claim for civil penalties. See Atlantic States Legal Found., Inc., v. Stroh Die Casting Co. , 116 F.3d 814, 820 (7th Cir. 1997); Natural Resources Defense Co uncil v. Texaco Ref. & Mktg., Inc. , 2 F.3d 493, 502-03 (3rd Cir. 1993); Atlanti c States L egal Found. v. Tyson Foods, Inc. , 897 F.2d 1128, 1135 (11th Cir. 1990) ; Chesapeak e Bay Found., Inc. v. Gwaltney of Smithfield, Ltd. , 890 F.2d 690, 696-9 7 (4th Cir. 198 9). We agree with these decisions. Congress has granted the citizen suit plain tiff standing to seek civil penalties as well as injunctive relief against on-goin g violations

. See 33 U.S.C. §§ 1319(d) and 1365(a). Plaintiff retains “a concret e in terest” in enforcing its penalties claim, even if any penalties recovered from th e polluter go to the United States Treasury. When there is no agency enforcement action in the picture, a polluter should not be able to avoid otherwise appropri ate civil penalties by draggi ng the citizen suit plaintiff into costly litigation and then coming int o compliance before the lawsuit can be resolved.

How ever, this is not a case of voluntary compliance mooting the citizen suit’ s cl aim for injunctive relief. Here, the on-going violations alleged in Comfort Lake’ s complaint are moot because of subsequent MPCA enforcement actions that terminated the NPDES permit and assessed Dresel and Fain civil p enalties for past violations. The Second Circuit addressed a similar situa tion in two cases. In Eastman Kodak , the state agency extracted $2,000,000 in criminal fines and ci vil penalties from the polluter. The Second Circ uit held that the citizen suit “may not revisit the terms of a settlemen t reached by competent state authorities” absent proof of a realistic prospect that th e alleged violations “will continue notwithstanding the settl ement.” 933 F.2d at 127. But in Atlantic States Legal Found., Inc. v. Pan American Tanning Corp. , 993 F.2d 1017, 1022 (2d Cir. 1993), the court held that a citizen suit claim for civil penalties was-9-

neither moot nor precluded when the poll uter’s settlement with a local agency involved a fine of only $6,600 and “did not cover all of the violations plaintiffs allege.”

These Second Circuit cases confirm that the problem here is not mootness

. Because Comfort Lake satisfied Gwa ltney ’s on-going violation test when its complaint was filed, there remains an actual controversyover its claim for civil penalties for these violations. Rather, the issue is what effect Dresel and Fain’s settleme nt with MPCA has on that claim for civil penalties. Or, to state the question differently, may Comfort Lake collaterally attack MPCA’s decision that civil penalties of $12,203 are appropriate for the very same violations alleged in the citizen suit. Neither Eastman Kodak nor Pan American Tanning provides a standard for answering that question. Therefore, w e return for guidance to the basic structure of the Clean Water Act.
An underlying prin ciple of the Clean Water Act is that “the citizen suit is meant to supplement rather than to supplant” go vernment enforcement action. Gwaltney , 484 U.S. at 60. For example, if EPA or MPCA commences a court enforcement actio n before or with in sixty days after a citizen suit plaintiff’s notice of intent to sue, th e citizen suit is completely barred. See 33 U.S.C. § 1365(b)(1)(B). Even wh en an agency enforcement

action is not commenced until after the citizen suit, final judgment in the agency’s court action will be a res judicata or collateral estoppel bar to the earlie r citizen suit. See United States EPA v. City of Green Forest , 921 F.2d 1394, 1402-05 (8th Cir. 1990), cert. denied , 502 U.S. 956 (1991).

In add ition to court enforcement actions, EPA and many state agencies hav e statutor y authority to proceed by formal administrative action. When EPA “ha s commenced and is diligently prosecuting” such an administrative action under 33 U.S.C. § 1319(g), or when MPCA has commenced and is diligently prosecuting “an actio n und er a State law comparable to this subsection,” a subsequent citizen suit for civi l penalties is barred. 33 U.S.C. § 1319(g)(6). In its initial ruling, the district court held that MPCA’s December 1994 non-compliance letter and its February 1995 NoticeThe Supreme Court in Gwaltney raised a similar concern in concluding tha t 4 citizen suits may not challenge past violations: Suppose that the [EPA] Administrator . . . agreed not to assess o r otherwise seek civil penalties on the c ondition that the violator take some ext reme corrective action, such as to install particularly effective bu t expensive machinery, that it otherwise would not be obliged to take. If citize ns could file suit, months or years later, in order to seek the civi l penalties that the Administrator ch ose to forego, then the Administrator’s discretion to enforce the Act in the public interest would be curtaile d consider ably. The same might be said of the discretion of stat e enforcement authorities. 484 U.S. at 61
-10- of Violation did not “commence” an administrative enforcement action, and therefore Comfort Lake’s citizen suit was not wholly barred by § 1319(g)(6) (a cross appeal issue

we decline to consider). The Stipulation Agreement between MPCA and Dresel an d Fain is not a res judicata or coll ateral estoppel bar, like the judicially approved consent decree i n Green Forest . But as a final agency enforcement action, that Agreement i s entitled to considerable deference if we are to achieve the Clean Water Ac t’s stated goal of pres erving “the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution.” 33 U.S.C. § 1251(b). Moreover, respondents like Dresel and Fain wil lbe disinclined to resolve disputes by such relatively informal agreements i f additional civil penalties may then be imposed in pending citizen suits, thereb y depriving MPCA of this resource-cons erving enforcement tool. For these reasons, we 4 conclude that an administrative enforcement agreement between EPA or MPCA and the polluter will preclude a pending citizen suit claim for civil penalties if the agreement is the result of a diligently prosecuted enforcement process, however informal.

In this cas e, MPCA began informal action to enforce the NPDES permit i n December

1994, before Comfort Lake issued its notice of intent to sue for the sam e violations. The agency diligently pursued Dresel and Fain to end permit violations until-11-

May 1995, w hen it concluded compliance had been achieved. After construction was compl ete, MPCA terminated the permit and negotiated stipulated penalties for pas t violations. As the district court noted, MPCA extracted a civil penalty that “exceeds penalties imposed in similar cases [a nd] was derived by looking at factors substantially similar to those which must be considered by a court imposing penalties under” th e Clean Water Act. BecauseMPCA diligently prosecuted its enforcement demands, the civil penalties it elected to extract in settling those demands may not be reconsidere d in thi s citizen suit. While Comfort Lake might have preferred more severe civi l penalties, MPCA has the primary responsibility for enforcing the Clean Water Act.

IV. Should Attorney’s Fees Have Been Awarded?
Although Comfort Lake’s claims for affirmative relief are foreclosed by th e subsequent MPCA enforcement actions, Comfort Lake may still be entitled to an award of costs and a reasonable attorney’s fee as a prevailing part y under 33 U.S.C. § 1365(d) if its citizen suit was the catalyst for agency enforcement action that resulted in th e cessation of Clean Water Act violations. See Eastman Kodak , 933 F.2d at 128; Green Forest , 92 1 F.2d at 1402. However, the district court determined that Comfort Lak e
was no t a catalyst, both because MPCA began enforcing the permit before Comfor t Lake’s notice of intent to sue, and because Comfort Lake “actually impeded” agency enforcement by suing MPCA in state court and then actively opposing the propose d Stipulation Agreement. This finding of fact is not clearly erroneous. See Shipman v. Missouri Dept. of Family Servs. , 877 F.2d 678, 682 (8th Cir. 1989) (standard o f review), cert. denied , 493 U.S. 1045 (1990). The finding is well supported by th e affidavit of MPCA’s supervisor in charge of enf orcing the NPDES permit, who averred tha t Comfort Lake impeded and delayed the enforcement process and that “MPCA’ s enforcement

actions would have been the same even in the absence of a citizen’s suit by the Comfort Lake Association, except that the en forcement actions would have been completed sooner.” Because Comfort Lake was not a prevailing pa rty, the district court properly denied its request for costs and attorney’s fees. The question whether-12-

Dresel and Fain may depose Comfort Lake’s attorney on attorney’s fee issues i s therefore moot.
The judgment of the district court is affirmed.
A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.