“A Cottage Industry”- The Economics of CWA Citizen Suit Enforcement

Short summary

Environmental organizations use fee-shifting CWA citizen suit provisions to fund enforcement against industrial stormwater violations, with settlements directing millions to plaintiff legal teams and intermediaries. Rising settlement amounts and pass-through intermediaries like the Rose Foundation have raised regulatory scrutiny over whether these structures improperly channel defendant payments to plaintiff organizations. Current DOJ/EPA enforcement posture may increasingly scrutinize such settlement arrangements.

• •CWA citizen suit enforcement in California has become a recurring, fee-driven litigation model resulting in hundreds of suits and tens of millions in payments since 2010
• •Settlements direct defendant payments across three categories: plaintiff attorney fees (often largest line item), SEP/mitigation contributions to third parties, and annual compliance monitoring fees
• •Use of pass-through foundations to channel mitigation funds back to plaintiff organizations raises questions about whether structures circumvent legal restrictions on direct plaintiff compensation

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