For the second time in six years, a federal appellate court has invalidated significant portions of the Environmental Protection Agency’s (EPA) regulations governing the nation’s livestock industry. In National Pork Producers, et al. v. United States Environmental Protection Agency[1] (NPPC v. EPA), the United States Court of Appeals for the Fifth Circuit vacated portions of EPA’s 2008 regulations (2008 Rule) that obligated large livestock producers to apply for a National Pollutant Discharge Elimination System (NPDES) permit. The Circuit Court also struck the 2008 Rule’s imposition of liability upon Concentrated Animal Feeding Operations (CAFOs) for the failing to apply for a permit – regardless of whether they discharged pollutants to federally regulated waters.

The Fifth Circuit’s March 15, 2011, decision concluded that portions of EPA’s regulatory scheme exceeded the agency’s permissible authority under the federal Clean Water Act (CWA). The decision largely re-affirmed existing precedent, as set forth in Waterkeeper Alliance v. Environmental Protection Agency[2] (Waterkeeper). In that case, Court of Appeals for the Second Circuit addressed whether EPA had authority, pursuant to the EPA’s 2003 CAFO Rule (2003 Rule), to mandate that all CAFOs either apply for an NPDES permit or demonstrate that the facility had “no potential to discharge.” The Second Circuit concluded that the CWA grants jurisdiction to the EPA to regulate only “actual discharges” to “navigable waters” and that without such a discharge, the EPA lacked authority to regulate “potential discharges” or “point sources.”[3]

The 2008 CAFO Rule (2008 Rule) was the EPA’s response to the Waterkeeper decision. The 2008 Rule required, inter alia, any CAFO that discharges or “proposes to discharge” to apply for an NPDES permit. Any CAFO issued an NPDES permit was required to develop and maintain a Nutrient Management Plan (NMP) to be included within the permit as enforceable effluent limitation. The 2008 Rule also imposed liability for failing to apply for an NPDES permit. Various agricultural and environmental groups challenged portions of the 2008 Rule in several circuits and the case was consolidated in the Fifth Circuit.

In its opinion, the Fifth Circuit concluded that the EPA’s attempt to regulate CAFOs that “propose to discharge” was improper given that the agency’s jurisdiction under the CWA is limited to regulating the discharge of pollutants. Although CAFOs are defined as “point sources” under the Act, the EPA has no authority over a CAFO absent a discharge of pollutants. There is “no doubt that there must be an actual discharge into navigable waters to trigger the CWA’s requirements and the EPA’s authority.”[4] The Court further held that the EPA does not have authority under the CWA to impose liability for failing to apply for a permit.

The decision was not a complete victory for agricultural interests. The Circuit Court affirmed the purported requirement in the 2003 Rule that CAFOs that applied for NPDES permits develop and implement NMPs. Although the 2003 Rule did not require NMPs to be incorporated into the terms of the NPDES permit, the Second Circuit in Waterkeeper mandated such a requirement and the EPA followed this directive in promulgating the 2008 Rule. Despite the lack of a express requirement in the text of the 2003 Rule, the Fifth Circuit held that the agricultural petitioners’ challenge to that portion of the 2008 Rule was time-barred on the somewhat perplexing ground that the requirement was one “promulgated in the 2003 Rule.”

More troubling for agricultural interests is the Fifth Circuit’s rejection of the challenge to three guidance letters issued by the EPA (Guidance Letters). The Guidance Letters provided that poultry growers were required to apply for NPDES permits based upon the release of dust through fans in confinement houses. Although the Fifth Circuit’s conclusion that the Guidance Letters did not constitute final agency action was not surprising, it also held that the Guidance Letters “neither create new legal consequences nor affect [poultry growers’] rights or obligations.” The Court noted that they “only reiterate what has been well-established since the enactment of the CWA – CAFOs are prohibited from discharging pollutants without a permit.”[5] Although the prohibition against discharges without a permit is hardly novel, the breadth of the Fifth Circuit’s language likely gives the EPA substantial support for further regulatory issuances and enforcement actions against poultry and other large-scale agricultural producers based upon alleged “discharges” from ventilation fans in CAFO barns.

The effect of NPPC v EPA is that it again appears clear that the EPA cannot require non-discharging CAFOs to apply for NPDES permits and cannot impose liability for the failure to apply for a permit. This is good news for large pork and poultry producers. However, if the EPA aggressively targets dust, feathers and other materials expelled from ventilation fans based upon dicta in the remainder of the opinion, such action is substantially certain to trigger challenges from agricultural interests.