City of Highland Park v. Envtl. Prot. Agency

CITY OF HIGHLAND PARK, Plaintiff, v. ENVIRONMENTAL PROTECTION AGENCY, et al., Defendants.

Case No. 2:16-13840

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

September 30, 2017

HONORABLE STEPHEN J. MURPHY, III

OPINION AND ORDER RESOLVING MOTIONS [19, 20, 23, 34, 40, 69-72] AND DISMISSING CERTAIN DEFENDANTS

Highland Park brought suit against several governmental entities and the individuals who work for them. One Defendant, Wayne County, filed an answer, but the rest filed motions to dismiss. After briefing on the motions concluded, Highland Park filed a motion for leave to amend the complaint. The federal Defendants¹ did not oppose the motion to amend, but every other Defendant did. For the reasons below, the Court will grant the motion to amend, but dismiss several of the Defendants.

STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 15(a)(2), a court should "freely give leave" for a party to file an amended complaint "when justice so requires." District courts can, however, deny a motion for leave to amend on the basis of "undue delay, bad faith or dilatory motive . . . [or] futility of amendment." Prater v. Ohio Educ. Ass'n, 505 F.3d 437, 445 (6th Cir. 2007) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). "Amending would be futile if a proposed amendment would not survive a motion to dismiss." SFS Check, LLCv. First Bank of Delaware, 774 F.3d 351, 355 (6th Cir. 2014). Accordingly, the proposed amended pleading must "raise a right to relief above the speculative level" and "state a claim to relief that is plausible on its face." Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)).

BACKGROUND

The present suit is only the latest link in a long chain of litigation between Highland Park and other entities concerned with water and sewage. The dispute has its origins in a contract between Highland Park and the City of Detroit. The contract concerned wastewater treatment and was executed in 1983. In 1993 and 1995, Detroit filed federal lawsuits against Highland Park to recover arrearages. Detroit prevailed in both cases and secured judgments of $8 million and $2.5 million, respectively. The parties to the suits signed a settlement agreement and an amended consent judgment in 1996.

Litigation resumed, however, in 2013. Detroit filed another federal lawsuit against Highland Park, this time for its alleged failure to comply with the 1996 agreement and judgment. The court dismissed the case for lack of subject-matter jurisdiction, so Detroit brought suit in Wayne County Circuit Court. The circuit court entered judgment in favor of Detroit in the amount of $19,244,838.53, plus interest and costs. Highland Park appealed the judgment, but ultimately abandoned any argument challenging the validity of the judgment itself. The Michigan Court of Appeals affirmed the circuit court.

Two more suits commenced in 2015. Highland Park sued Wayne County over stormwater treatment costs, but the court granted summary disposition in favor of Wayne County. Highland Park also sued the Michigan Department of Transportation (MDOT) inthe Court of Claims on the grounds that Highland Park had been improperly charged for the treatment of run-off from two Michigan highways. The case is still pending.

Highland Park filed the instant suit in late 2016. Shortly after the parties began filing their motions to dismiss, the Court referred the matter to the magistrate judge for settlement discussions. The parties and the magistrate judge discussed settlement over the course of two months, but ultimately failed to reach an agreement.

DISCUSSION

At the outset, Highland Park's proposed, amended complaint is clearer, more specific, and a great deal longer than the initial complaint. Absent other considerations, the liberal standard for granting leave to amend would compel the Court to permit the amendment. But there are other considerations—namely, the prospect of futility. Several of the Defendants have insisted that the lack of adequate notice is a fatal flaw to the complaint, no matter how it is amended. The Court will therefore address this argument first.

I. The Notice Requirement

The Clean Water Act (CWA, or, the Act) allows "citizen suits." That is, the Act permits citizens to commence lawsuits against the United States and other governmental instrumentalities and agencies for specified violations of the Act. 33 U.S.C. § 1365(a). There are two categories of citizen suits: the first concerns violations of either "an effluent standard or limitation" or "an order issued by the Administrator or a State with respect to such a standard or limitation[.]" Id. The second category concerns suits "against the Administrator where there is an alleged failure of the Administrator to perform any act or duty under [the Act] which is not discretionary[.]" Id. To commence either type of citizen suit, a plaintiff must first give 60 days "notice of the violation". If the violation is in the firstcategory, notice must go to (1) the EPA, (2) the state where the violation allegedly occurred, and (3) the person or entity that committed the alleged violation. 33 U.S.C. § 1365(b)(1). If it is in the second category, only the EPA must be noticed. 33 U.S.C. § 1365(b)(2). There is only one exception to the 60-day rule: a plaintiff may bring an action immediately after providing notice if the alleged violation arose under §§ 1316 and 1317(a). 33 U.S.C. § 1365(b).

The Act empowers the EPA to determine how notice is to be given, and the EPA has created some ground rules. See 33 U.S.C. § 1365(b); 40 C.F.R. § 135.3. For instance, the contents of the notice are contingent upon which of the two categories the alleged violation falls into. If the alleged violation is in the first category—a "violation of an effluent standard or limitation or of an order with respect thereto"—the notice shall:

include sufficient information to permit the recipient to identify the specific standard, limitation, or order alleged to have been violated, the activity alleged to constitute a violation, the person or persons responsible for the alleged violation, the location of the alleged violation, the date or dates of such violation, and the full name, address, and telephone number of the person giving notice.

40 C.F.R. § 135.3(a). If, on the other hand, the alleged violation falls into the second category—an alleged failure of the Administrator to perform a non-discretionary act or duty—the notice shall:

identify the provision of the Act which requires such act or creates such duty, shall describe with reasonable specificity the action taken or not taken by the Administrator which is alleged to constitute a failure to perform such act or duty, and shall state the full name, address and telephone number of the person giving the notice.

40 C.F.R. § 135.3(b). In any case, the notice "shall state the name, address, and telephone number of the legal counsel, if any, representing the person giving the notice." 40 C.F.R. § 135.3(c).

The instant case is a citizen suit; Highland Park's proposed amended complaint is predicated on several alleged violations of the Act. The counts² of the complaint cover both citizen-suit categories: counts 1-8 are against the EPA for its failure to perform mandatory or non-discretionary duties, and counts 9-19 are against other entities for their alleged failures. Some concern §§ 1316 and 1317(a).

Prior to filing the instant suit, Highland Park sent a notice letter on March 3, 2016 to the following recipients:

• Robert Kaplan, Acting Administrator of the EPA

• The Water Enforcement Division of the EPA

• The Environment and Natural Resources Division of the Department of Justice

• Keith Creagh, Director of the Michigan Department of Environmental Quality

• Sue McCormick, Executive Director of the Great Lakes Water Authority (GLWA)

See ECF 1-13, PgID 119. The letter mentioned § 1365's notice requirement, provided some background information about Highland Park's predicament, and described several alleged CWA violations. See generally id. The letter set forth the alleged violations over the course of four sections. In a section titled "Violation of Mandatory Requirements of Section 204(b)", the letter explained how and why GLWA's "charges to Highland Park have not been proportionate to its use[.]" Id. at 124. In the next section, titled "Violation of the Combined Sewer Overflow Control Policy", the letter cited an EPA Policy which allegedly requires GLWA to implement certain stormwater measures. Id. at 126-27. A third section alleged that Detroit's previous lawsuit resulted in a tax regime that violates the CWA. Id. at 127. A fourth and final section alleged that "GLWA and the State of Michigan violate the conceptsof environmental justice reflected in Executive Order 12898 of February 11, 1994[.]" Id. at 128. The letter was signed by Highland Park's mayor, Hubert Yopp. Id. at 129.

Several of the Defendants have argued that the notice was insufficient. GLWA argues that the letter "makes clear that Highland Park's citizen suit is not premised upon GLWA violating a standard, limitation, or order of the EPA or the MDEQ." ECF 20, PgID 1142 (quoting Nat'l Parks Conservation Ass'n v. TVA, 175 F. Supp. 2d 1071,1077-78 (E.D. Tenn. 2001)) (quotation marks and alterations omitted). MDEQ and Creagh argue that the letter is inspecific, because it "focused exclusively on . . . a provision regarding federal grant money" but never asserted that MDEQ violated the CWA or that "MDOT's highways constitute illegal, unpermitted discharges under 33 U.S.C. § 1342." ECF 23, PgID 1280, 1286. MDOT and Steudle pointed out that the letter was not sent to them, ECF 34, PgID 1337, and though Wayne County did not mention it in its answer, it too failed to receive notice. See ECF 1-13, PgID 119 (recipient list); ECF 77, PgID 2340 ("Plaintiffs agreed with the MDOT and Wayne County . . . that service . . ....