The Ninth Circuit vacated the district court's dismissal of a Clean Air Act (CAA)[1] action and remanded the case to state court. The Sacramento Metropolitan Air Quality Management District (Sacramento Air Quality District) brought an action against the United States for violations of state and local air pollution laws adopted pursuant to the Clean Air Act. The court held that the district court improperly allowed the federal government to remove the action, under the federal removal statute,[2] and that the district court did not have subject matter jurisdiction over the claim; therefore, there was no way to cure the defect of removal. As a result, the Ninth Circuit remanded the case to the California state court.

Pursuant to the CAA, the Sacramento Air Quality District adopts and enforces air quality standards and limitations that must be at least as stringent as standards promulgated by the federal government. Any facility in the authorized area that wishes to construct or operate any equipment that may emit air pollutants must obtain a permit from the Sacramento Air Quality District. The McClellan Air Force Base (McClellan), operated by the United States and located in Sacramento County, California, runs eight natural gas radiant heaters under a permit issued by the Sacramento Air Quality District. In early 1996, McClellan's heaters exceeded the permit's natural gas usage and nitrogen oxide emission levels. After issuing a notice of noncompliance to McClellan for the permit violations, the Sacramento Air Quality District filed suit against the United States in state court to recover civil penalties and enjoin future violations of air quality standards. The federal government removed the case to federal district court. Once in the district court, the parties stipulated to the facts, and the Sacramento Air Quality District withdrew its claim for injunctive relief. Both parties then filed for summary judgment on the only remaining issue--whether the federal government had waived its sovereign immunity from liability for penalties imposed for past violations of state and local air quality laws. The district court held that the CAA does not provide for a waiver of sovereign immunity, and entered judgment in favor of the United States.

On appeal, the Ninth Circuit determined the case was improperly removed to the federal district court. However, the Supreme Court has held that a defect in removal from state court can be cured if the defect is not raised before the district court and the district court has subject matter jurisdiction at the time of final judgment.[3] After determining removal was improper, the Ninth Circuit concluded that the district court lacked subject matter jurisdiction.

In the course of reviewing the merits of the appeal, the Ninth Circuit observed that language in the CAA conflicts with the federal removal statute. As a result, the CAA prohibits the removal of actions brought by state or local governments under state and local air pollution laws. CAA section 304(e) specifically protects the right of state and local governments to obtain remedies or sanctions against the federal government in state courts pursuant to state and local laws regarding the control and abatement of air pollution.[4] Therefore, even though the federal removal statute generally allows removal, if the Sacramento Air Quality District's claim is removed to federal court, it would be impossible for the state government to obtain remedies or sanctions in state court.

The Ninth Circuit reasoned that the language and legislative history of the CAA Amendments of 1977,[5] as well as the history of the CAA regulation of federal facilities, supported its conclusion. The CAA Amendments of 1970[6] placed an affirmative duty on federal facilities to comply with the air pollution laws of state and local governments. Yet the Supreme Court concluded in Hancock v. Train[7] that Congress did not intend to subject federal facilities to the state procedures used to enforce state and local air pollution laws.[8] When Congress amended the CAA in 1977, language in the amendments expressly required federal facilities to comply with the procedural and substantive requirements of state and local air pollution laws. In addition, Congress added language to protect a state's ability to bring an enforcement action and obtain remedies or sanctions in state court. The court concluded that the plain language of the 1977 amendments demonstrated Congress's intent to prevent removal of actions brought by state and local governments under their own air pollution laws. By guaranteeing the right to obtain remedies or sanctions in state court, the removal of state or local actions brought under state air pollution laws is necessarily prohibited. Once an action is removed to federal court it becomes impossible to obtain remedies or sanctions in the state or local court.

The court also found support for its conclusion in the legislative history of the 1977 amendments to the CAA. The legislative history demonstrated Congress's frustration with the federal government's failure to comply with state and local air quality laws. As a result, the court concluded that Congress believed that adjudicating state law issues of air pollution in state court was an important step in achieving federal facility compliance. Therefore, the amendments included far-reaching language that guaranteed a state's right to commence an action and obtain remedies and sanctions in the state courts. For additional support, the court compared language in the Clean Water Act amendments of 1977[9] to the language of the 1977 CAA amendments. The court noted that the amendments to the Clean Water Act expressly preserved the right of the federal government to remove an action. The absence of similar language in the CAA reinforced the court's conclusion. After considering all of the factors together, the court concluded that, "Congress consciously foreclosed the removal of actions brought against federal facilities by state and local governments pursuant to state and local air quality laws."[10]

Furthermore, the Ninth Circuit reconciled its conclusion against the axiom of statutory construction that a court should avoid a potential conflict when interpreting two seemingly inconsistent statutes. The court reasoned that despite the apparent conflict between the federal removal statute and the CAA, it is possible to give both statutes full effect. Because it is "fundamental that a general statutory provision may not be used to nullify or trump a specific provision,"[11] the court found that Congress intended to give the federal government a "general right of removal [but] did not intend for the right to apply to actions brought by state and local governments pursuant to their own air quality laws."[12] This construction does not interfere with the general operation of the federal removal statute.

Finally, the court considered whether the district court had subject matter jurisdiction. Because the Sacramento Air Quality District did not raise the removal defect in front of the district court, the defect could be cured if the district court had subject matter jurisdiction at the time of final judgment. The Ninth Circuit applied the "well-pleaded complaint" rule and determined that federal question jurisdiction did not exist. Under the well-pleaded complaint rule a federal question exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. The Sacramento Air Quality District based its claim entirely on state and local air pollution laws. The Ninth Circuit determined that even though state and local air pollution laws play a role in achieving the goals of the CAA, they do not give rise to a federal cause of action. Furthermore, reference in the complaint to the likelihood that the federal government will raise the defense of sovereign immunity is not enough to raise a federal question under the well-pleaded complaint rule. The Ninth Circuit concluded that because federal question jurisdiction did not exist, the district court lacked subject matter jurisdiction to hear the merits of the case and remanded the action to the state court.