On April 28, the U.S. Court of Appeals for the First Circuit, sitting en banc, overturned its own 30-year-old precedent on the Clean Water Act (CWA), North & South Rivers Watershed Ass’n v. Town of Scituate, 949 F.2d 552 (1st Cir. 1991). Under Town of Scituate, “diligent prosecution” of a federal administrative enforcement action (or certain comparable state administrative enforcement actions) would bar a later CWA citizen suit for either civil penalties or for declaratory or injunctive relief for the same violation. The First Circuit has now abandoned that holding in Blackstone Headwaters Coalition, Inc. v. Gallo Builders, Inc. While administrative enforcement will continue to bar citizen suits for monetary penalties, it will no longer preclude later suits for equitable relief.

This new rule reduces the incentive for CWA defendants to negotiate administrative settlements with EPA or state regulators; if such settlements will no longer bring finality to a set of allegations, a defendant might see the need to fully contest those allegations. However, the Blackstone court acknowledged that its new rule is inconsistent with the current rule in at least one other circuit, so the new decision raises the potential for future Supreme Court involvement on this issue of significant importance to the regulated community.