Citizen suits under the Clean Water Act were designed to supplement government enforcement, allowing private parties to step in when regulators could not or would not act. In California’s industrial stormwater space, however, citizen suit enforcement has also developed into a recurring, fee-driven litigation model used by a relatively small number of environmental organizations and an even smaller number of plaintiffs’ law firms.
How the Money Works
The CWA’s fee-shifting provision, Section 505(d), allows prevailing or substantially prevailing plaintiffs to recover their attorney’s fees, expert fees, and litigation costs from defendants. This provision is central to how the model works. Plaintiffs’ counsel typically work on a contingency or deferred-fee basis, advancing time and costs with the expectation of recovery through settlement. Because the defendant, rather than the plaintiff, may ultimately bear the cost of the plaintiff’s legal team, the financial risk to the plaintiff organization is relatively limited.
Public consent decrees illustrate both the mechanics and the scale. In a case against a Los Angeles wire manufacturer, LA Waterkeeper obtained a total settlement of $775,000. A case against a Wilmington auto dismantler resulted in a $624,000 settlement, and a scrap metal recycler in Monrovia paid $312,000. In each case, the total payment is divided among several categories: attorney’s fees and costs to plaintiff’s counsel (often the single largest line item); environmental mitigation or “Supplemental Environmental Project” (“SEP”) payments to third-party organizations such as the Rose Foundation; annual compliance monitoring fees paid to the plaintiff organization; and per-incident payments triggered each time an action plan or analyte reduction strategy is required.
In LA Waterkeeper v. Universal Molding Company, an aluminum manufacturing operation in Los Angeles County agreed to a consent decree totaling over $325,000. The single largest line item was not an environmental project; it was $185,500 in attorney's fees and costs to plaintiff's counsel. Next came $100,000 in SEP payments, followed by $40,000 in compliance monitoring fees paid to Waterkeeper. In other words, roughly $225,500 went to the plaintiff organization and its lawyers, and about $100,000 went to environmental groups. The facility's actual stormwater improvements, which the defendant funded separately, were not part of the settlement calculus.
The Rose Foundation Question
To understand why this matters, start with a structural constraint that citizen plaintiffs face: they generally cannot enter a consent decree that directs SEP payments, or functionally equivalent mitigation contributions, to themselves. Civil penalties recovered under CWA § 505 must be paid to the U.S. Treasury, not to the plaintiff. A payment styled as a “SEP contribution” but retained by the plaintiff organization can resemble a penalty diversion. However, a consent decree directing SEP money to the plaintiff itself may invite judicial scrutiny on the grounds that it reflects a negotiated financial benefit rather than genuine environmental remediation. The recognized channel for compensating the plaintiff’s enforcement work is attorney’s fees under § 505(d), not SEP payments.
This is why most consent decrees direct SEP and mitigation payments to independent third-party organizations, and in California stormwater settlements, that organization is frequently the Rose Foundation for Communities and the Environment in Oakland. The Rose Foundation is a grant-making organization, and directing mitigation payments to an independent fund is how these settlements are generally intended to work. A pattern in the Rose Foundation’s own grant-making, however, has prompted questions. As one commentator has noted, the Rose Foundation has at times made substantial grants to the same organizations that bring these enforcement actions, including nearly $200,000 to California Sportfishing Protection Alliance and $85,000 to San Francisco Baykeeper in a single year.
This raises a fair question as to whether the use of a pass-through intermediary may accomplish in practice what a direct payment to the plaintiff might not. If settlement dollars flow from the defendant to a third-party foundation and then, through grants, back to the plaintiff organization, the structural limitation on self-directed SEP payments could be respected in form but not fully in substance. Under the current DOJ and EPA “Compliance First” enforcement posture, arrangements that channel settlement funds to private advocacy organizations may face heightened scrutiny, and structures of this kind could draw a closer look.
The Scalable Model
What makes this model scalable is the combination of publicly available data, standardized notice templates, and strict liability. Plaintiffs typically identify potential targets through California’s SMARTS database, issue templated 60-Day Notices spanning 15 to 30 pages of allegations, and rely on the cost of defense as an incentive to settle. Many of these notices are resolved through private, confidential settlements reached before any complaint is filed, so a substantial share of the resulting payments never becomes public. The publicly available figures therefore capture only part of the picture: since 2010, a relatively small but growing number of environmental organizations have initiated hundreds of citizen suits, resulting in more than 150 federal consent judgments and, collectively, tens of millions of dollars in monetary payments in lieu of penalties, SEPs, and attorneys' fees. Because confidential pre-suit settlements are not reflected in those numbers, the actual prevalence of these matters, and their cumulative financial impact on California facilities, is likely considerably greater than the public record suggests.
Given the fee-driven nature of these cases, plaintiffs’ firms have expanded into new jurisdictions by partnering with environmental organizations that had no prior citizen-suit experience, broadening the geographic reach of this litigation across the state.
A Caveat
None of this means that every citizen suit is meritless. The CWA’s citizen suit provision serves a legitimate and important purpose, and some facilities genuinely need the accountability that private enforcement provides. At the same time, facility operators should understand the economic incentives that can drive these cases. Not every 60-Day Notice reflects a dispassionate assessment of environmental harm. Many are the product of a systematic process oriented toward recovery through fees, mitigation payments, and ongoing monitoring obligations, with the prospect of significant per-day penalties as a key point of leverage.
Understanding this dynamic is the first step toward an effective response. If you have received a 60-Day Notice or want to evaluate your facility’s exposure, contact the Allen Matkins environmental team.
California Stormwater Defense is published by Allen Matkins Leck Gamble Mallory & Natsis LLP. Nothing in this post constitutes legal advice. Contact us for a consultation specific to your facility.