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UNITED STATES v. PENNSYLVANIA ENVTL. HEARING BD.

June 13, 1974

UNITED STATES of America, Plaintiff,
v.
PENNSYLVANIA ENVIRONMENTAL HEARING BOARD et al., Defendants


Sheridan, Chief Judge.


The opinion of the court was delivered by: SHERIDAN

The United States of America brings this action requesting that "1. A judgment be entered declaring that: (a) Section 605 of the Pennsylvania Clean Stream Law, 35 P.S. 691.605, is neither applicable to nor enforceable against the United States or its officers or agents; (b) the civil penalties totaling $1,667,000.00 imposed by order of the Pennsylvania Environmental Hearing Board against the officers and agents of the United States, are invalid, and (c) the penalties entered as liens upon the Judgment Records of the Prothonotary of Lackawanna County, Pennsylvania, are null and void. 2. The defendants, their successors, agents, attorneys and employees be permanently enjoined from enforcing and collecting the said penalties as liens or instituting any proceedings to enforce the provisions of the Pennsylvania Clean Streams Law, 35 P.S. 691.605, against the plaintiff herein; . . . ." Jurisdiction is invoked under Sections 1345, 2201 and 2202 of Title 28 of the United States Code.

 Defendants have moved to dismiss the action on the grounds: (1) the court is without jurisdiction and the government lacks standing to sue; (2) the action is barred by the federal anti-injunction statute; (3) the doctrine of res judicata bars the court from granting relief; (4) the government waived its right to maintain this action since it did not remove the state proceeding pursuant to 28 U.S.C. § 1442 and § 1442a; (5) on principles of comity, the court should abstain; and (6) failure to exhaust administrative remedies and failure to state a claim upon which relief can be granted.

 On September 5, 1972, the Pennsylvania Department of Environmental Resources filed a complaint for civil penalties before the Pennsylvania Environmental Hearing Board (Board) against the Chamberlain Manufacturing Corporation, the operator of the United States Army Ammunition plant in Scranton, Pennsylvania; Daniel E. Duggan, Commanding Officer of that facility for the United States Army; and Robert Froehlke, Secretary of the Army. The complaint alleged violations of the Pennsylvania Clean Streams Law, Act of June 1937, P.L.1989, as amended, 35 P.S. § 691.1 et seq., and regulations promulgated thereunder. No answer was filed, and on October 19, 1972, a default judgment was issued against Chamberlain, Duggan and Froehlke. On December 18, 1972, a hearing was held for the purpose of fixing the civil penalties to be assessed. An Assistant United States Attorney appeared on behalf of Chamberlain, Duggan and Froehlke for the limited purpose of objecting to the jurisdiction of the Board on the ground that the action was against agents of the United States and barred by the doctrine of sovereign immunity. No evidence was presented by Chamberlain, Duggan or Froehlke. The Assistant United States Attorney did submit a written position on the jurisdictional question.

 The Board issued an "adjudication" and assessed civil penalties of $1,667,000.00 against Chamberlain and Duggan. As to Froehlke, the complaint was dismissed for lack of jurisdiction over his person. The Board rejected the sovereign immunity claim and found that the complaint was filed against private individuals who were not acting within the scope of their governmental authority, and that the action was not against the United States. Chamberlain and Duggan filed an appeal to the Pennsylvania Commonwealth Court allegedly to protect their rights in the event of an adverse determination here. Subsequently, the appeal was stayed by the Commonwealth Court pending the disposition of various motions in this action, or until its further order.

 The United States of America filed this action in its own right. The government initially moved for a preliminary injunction to prevent collection of the penalties imposed. The motion was withdrawn upon a stipulation that the liens would not be enforced pending the final disposition of this action.

 Because of the procedural handling of the entire matter and the conflicting federal and state interests, serious and difficult problems of federal-state relations are presented. The main issues center around the interplay of the United States, as plaintiff, seeking declaratory and injunctive relief in a federal court to protect its interests during the pendency of a state proceeding involving the same issues with alleged agents of the government as defendants in the state action.

 JURISDICTION AND STANDING

 The court has jurisdiction with the United States as plaintiff pursuant to 28 U.S.C.§ 1345. Contrary to the defendants' contentions, Section 1345 does not "simply provide the forum in which any particular action commenced by the United States may be taken up. . . ." See Leiter Minerals, Inc. v. United States, 1957, 352 U.S. 220, 223, 77 S. Ct. 287, 1 L. Ed. 2d 267. There can be no serious dispute that there is an actual controversy here since the government complains that the prior assessment of penalties by the Board "is a violation of the Constitutional immunity of the United States, its instrumentalities or agencies, from the imposition or collection of penalties, by virtue of its sovereign immunity." See generally Leiter Minerals, Inc. v. United States, supra; Island Airlines, Inc. v. C.A.B., 9 Cir. 1965, 352 F.2d 735; United States v. Bureau of Revenue of State of New Mexico, 10 Cir. 1961, 291 F.2d 677; United States v. Farmers State Bank, D.S.D., 1966, 249 F. Supp. 579; United States v. Livingston, E.D.S.C.1959, 179 F. Supp. 9, aff'd, 1960, 364 U.S. 281, 80 S. Ct. 1611, 4 L. Ed. 2d 1719. The United States is a proper party to bring an action to preserve its sovereign right. It begs the question to argue the United States is not a real party in interest because the penalties were assessed against private individuals and not against the United States and therefore that there is no interference with public administration and the judgment will not expend itself on the public treasury, when the United States in its own right contends to the contrary.

 ANTI-INJUNCTION STATUTE

 Section 2283 of Title 28, United States Code reads:

 
"A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments. . . ."

 Defendants argue the court lacks jurisdiction as the declaratory relief sought would necessarily be a permanent injunction against a state administrative proceeding. The United States is not a party to the Board proceeding. In Leiter Minerals, Inc. v. United States, supra, in which the United States brought suit to preliminarily enjoin a state court proceeding, the Court held that under proper circumstances, § 2283 is not applicable to stays sought by the United States.

 
". . . There is, however, a persuasive reason why the federal court's power to stay state court proceedings might have been restricted when a private party was seeking the stay but not when the United States was seeking similar relief. The statute is designed to prevent conflict between federal and state courts. This policy is much more compelling when it is the litigation of private parties which threatens to draw the two judicial systems into conflict than when it is the United States which seeks a stay to prevent threatened irreparable injury to a national interest. The frustration of superior federal interests that would ensue from precluding the Federal Government from obtaining a stay of state court proceedings except under the severe restrictions of 28 U.S.C. § 2283, 28 U.S.C.A. § 2283, would be so great that we cannot reasonably impute such a purpose to Congress from the general language of 28 U.S.C. § 2283, 28 U.S.C.A. § 2283, alone. . . .
 
". . .
 
". . . Therefore, since the position of the United States is essentially a defensive one, we think that it should be permitted to choose the forum in this case, even though the state litigation has the elements of an action characterized as quasi in rem. . . ." 352 U.S., at 225-226 and 228.

 Section 2283 is not a bar to the jurisdiction of this court. See also Mitchum v. Foster, 1972, 407 U.S. 225 at 235-236, 92 S. Ct. 2151, 32 L. Ed. 2d 705; NLRB v. Nash-Finch Co., 1971, 404 U.S. 138 at 144-146, 92 S. Ct. 373, 30 L. Ed. 2d 328.

 RES JUDICATA

 Defendants contend that Chamberlain and Duggan are bound by the Board's determination that it had subject matter jurisdiction, and that the Board's decision is res judicata and not subject to collateral attack.

 The defendants' position as to the United States is unclear. "The Defendants anticipate that the United States will raise the objection that sovereign immunity is a jurisdictional bar and that the applicability of the government's immunity from suit may be raised collaterally. United States v. United States Fidelity and Guaranty Co., 309 U.S. 506, 60 S. Ct. 653, 84 L. Ed. 894 (1940). But the United States is not bound by the judgment of the Hearing Board whereas Daniel Duggan and Chamberlain are. There can be no doubt that the subject matter jurisdiction of the Hearing Board is res judicata. Furthermore no question as to the government's immunity from suit can arise from the judgment rendered by the Board in that in no manner were the rights and duties of the United States affected. . . ." *fn1" Defendants later contend that "The decision of the Environmental Hearing Board is res judicata as to the United States." *fn2"

 The court's concern is not the res judicata effect on Chamberlain and Duggan but rather on the United States as plaintiff here. There is certainly cause for dispute whether the subject matter jurisdiction was actually litigated without reservation so as to preclude Chamberlain and Duggan from collaterally attacking jurisdiction in this court. See Restatement of Judgments, § 10 (1942); England v. Medical Examiners, 1964, 375 U.S. 411, 84 S. Ct. 461, 11 L. Ed. 2d 440.

 In Land v. Dollar, 1946, 330 U.S. 731, 67 S. Ct. 1009, 91 L. Ed. 1209, the Dollar Steamship Lines sued members of the Maritime Commission individually for return of certain stock allegedly pledged as collateral for a debt which had been paid. The defendants defended on the ground the suit was against the United States and consequently barred by sovereign immunity. The Court held plaintiff was entitled to maintain the suit to prove the stock never had been the property of the United States and was being wrongfully withheld by the individual defendants who acted in excess of their authority as public officers and were answerable personally for their actions. However, under the authority of United States v. Lee, 1882, 106 U.S. 196, 1 S. Ct. 240, 27 L. Ed. 171, the Court reiterated several times that any judgment would not be res judicata as to the United States, Land v. Dollar, supra, at 736, 737, 739.

 United States v. United States Fidelity Co., 1940, 309 U.S. 506, 60 S. Ct. 653, 84 L. Ed. 894, involved a situation in which the United States had filed a claim in a prior proceeding for the Indian Nations for royalties due under leases. Subsequently, the United States brought suit in which a ...


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