The Tenth Circuit Court of Appeals affirmed a district court order dismissing all Clean Air Act citizen suit claims of the Sierra Club on grounds of collateral estoppel, even though the Sierra Club was not a party to the prior administrative proceedings. Sierra Club v. Two Elk Generation Partners, Limited Partnership, 2011 WL 2120048 (C.A. 10 (Wyo.)). The United States Court of Appeals looked carefully at the district court’s account of the history of the permitting of the utility, which was alleged to be attempting to build a coal-fired power plant with an invalid Prevention of Significant Deterioration permit. The Tenth Circuit noted that the Sierra Club, although watching carefully during the administrative process leading to issuance of the utility permit, elected not to intervene as a party.[1] That choice was fatal to the Sierra Club’s claims. The Tenth Circuit made it clear that citizens groups would not be permitted to stand by idly and wait to see how administrative proceedings were resolved so that the citizens could file their own action challenging the unsatisfactory administrative proceeding:

[t]hroughout the administrative process, [Sierra Club] remained mute and chose to speculate on the outcome of the dispute. When the dispute was concluded and [Sierra Club] determined that misfortune had come their way, they then chose to voice their displeasure. This conduct is contrary to the Wyoming supported policies of settlement and finality and will not be condoned.

2011 WL 2120048, at *6.

The Sierra Club argued that (i) it was not a party to the prior proceedings, and (ii) it was not in privity with the government when DEQ entered into a settlement with the utility following a contested administrative proceeding. Therefore, collateral estoppel (issue preclusion) could not bar the Sierra Club’s claims. The Sierra Club also argued it was not in privity with DEQ because of the Sierra Club’s national membership.

Both the district court and the Tenth Circuit Court of Appeals disagreed. Because the government filed suit to protect its citizens against air pollution, under the doctrine of parens patriae, the DEQ’s interests were in privity with the citizens of Wyoming, and also in privity with the Sierra Club, which represented the interests of citizens of Wyoming. Therefore, the privity prong for applying collateral estoppel was satisfied. In addition, the court rejected the Sierra Club’s argument that its national membership excluded it from application of collateral estoppel.

The Tenth Circuit’s decision (2-1) may at a later time be subject to en banc or Supreme Court review given the importance of the issue preclusion bar. If the Tenth Circuit decision stands, it sounds a warning to all citizens groups that choose not to intervene in administrative proceedings and wait to see the outcome before filing a legal challenge.

[1] “Indeed, during the federal district court’s hearing on Two Elk’s motion to dismiss, counsel for Sierra Club admitted that Sierra Club did not intervene at an earlier stage because it believed DEQ would adequately prosecute the matter.” 2011 WL 2120048, at *6. The Sierra Club never appeared to contest the Stipulated Settlement Agreement between DEQ and Two Elk. Id.