United States v. ITT Rayonier, Inc.

The Washington Department of Ecology (DOE) issued a discharge permit to ITT Rayonier, Inc. (Rayonier) (defendant), a pulp mill. The Environmental Protection Agency (EPA) (plaintiff) had not finalized its new effluent discharge limits. Rayonier’s permit therefore contained a footnote saying that the effluent discharge limits in the permit would be modified when the EPA’s new effluent limits were released or would remain consistent with any final order resulting from an appeal affecting the new effluent limits. In 1975, the DOE started a compliance proceeding against Rayonier. Rayonier appealed to the state pollution-control board (state board). In 1976, the EPA issued new effluent discharge rules for pulp mills. Rayonier and other mills challenged the new rules in federal court. Before the state board, Rayonier argued that the permit’s footnote had the effect of extending the time Rayonier had to comply with the permit’s terms until the federal appeals were resolved. The state board ruled against Rayonier. Rayonier appealed to the state superior court. In 1977, the state superior court reversed the state board’s order, ruling that the footnote extended Rayonier’s compliance time. The DOE appealed to the state supreme court. The EPA filed its own action against Rayonier in federal court. In July 1977, the statutory deadline for compliance with effluent limits passed. In October 1977, a federal district court judge granted summary judgment for the EPA on the EPA’s request for injunctive relief. The judge found that the footnote allowed for modification of the effluent limits but not of the compliance schedule. Rayonier appealed. Before the appeal was heard, the United States Court of Appeals for the District of Columbia Circuit upheld all but one of the EPA’s new effluent limits. The state supreme court, however, ruled in favor of Rayonier against the state board, holding that the footnote in the permit recognized that the publication of the EPA’s new effluent limits and the compliance schedule were interdependent because Rayonier needed to know the rules before expending funds on compliance. In appealing the district-court order, Rayonier argued that collateral estoppel and res judicata barred the EPA from relitigating the footnote issue. Rayonier argued that the EPA’s privity of interest with the DOE made the state supreme court’s ruling binding on the EPA.