The United States Court of Appeals for the Fourth Circuit held that a coal mining company could not take advantage of the Clean Water Act’s “permit shield” defense in the recent case of Southern Appalachian Mountain Stewards v. A & G Coal Corp, 758 F.3d 560 (4th Cir. July 11, 2014). The A & G Coal case involved the discharge of selenium from a mine in Virginia.
The mine, operated by A & G, held a NPDES permit authorizing the discharge of certain pollutants, but selenium was not mentioned in the permit; the permit neither authorized nor contained limits on selenium. The environmental interest group plaintiffs took samples of discharges from the mine, discovered that the discharges contained selenium, and filed suit arguing that the selenium was being discharged without a permit, in violation of the Clean Water Act (CWA).
A & G argued that it was protected from liability by the CWA’s permit shield. A federal trial court in Virginia held that A & G’s NPDES permit application did not comply with the disclosure requirements in the National Pollutant Discharge Elimination System (NPDES) permitting regulations, and therefore, A & G could not take advantage of the permit shield. A & G appealed this decision to the Fourth Circuit Court of Appeals, which reviews decisions of federal trial courts in Maryland, North Carolina, South Carolina, Virginia, and West Virginia.
The permit shield of the CWA states that “compliance with a [NPDES permit] shall be deemed compliance” with the effluent limitation provisions of the CWA. See 33 U.S.C. § 1342(k). The permit shield protects permit holders who discharge pollutants that they and the relevant permitting authority had no reason to believe to be present in their discharges, or for which the permitting agency believed no effluent limitations should be established. EPA and various federal courts have held that a permit holder can only use the permit shield defense when: 1) the permit holder complies with the express terms of its permit and the permitting regulations requiring the permit holder to disclose those pollutants that might be present in its wastestream and 2) the pollutant that is not listed in the permit was still within the “reasonable contemplation” of the permitting agency when the permit was issued.
In the A & G case, it was undisputed that selenium was not listed in A & G’s NPDES permit application as a pollutant that might be present in the company’s discharges. A & G argued that it was not required to address selenium in its permit application because it had no reason to believe that selenium would be present in its discharges. The Fourth Circuit rejected this argument for two reasons. First, it noted that Virginia’s NPDES permitting regulations specifically require a permit applicant to submit an analysis of total selenium as part of its permit application, and A & G submitted no such analysis. Second, the court noted that federal NPDES regulations require that an applicant state either that a pollutant is “believed present” in the discharge or “believed absent” in the discharge. Because A & G’s application did not mention selenium at all, the court held, the permit shield was not available.
The A & G decision underscores the importance of a complete and thorough NPDES permit application for permit holders wishing to take advantage of the permit shield. The court’s opinion makes clear that an applicant who has not precisely complied with NPDES application regulations will not be able to invoke the permit shield defense, at least in the states within the Fourth Circuit.
In addition to the A & G case, other courts continue to define the scope of the NPDES permit shield. In Kentucky, the U.S. District Court for the Eastern District of Kentucky ruled in the case of Sierra Club v. ICG Hazard that discharges of selenium were subject to the permit shield defense when the permit holder was operating in compliance with the KPDES Coal General Permit, even though the Coal General Permit at issue in that case did not require the sort of detailed application and disclosure of potential pollutants at issue in A & G. The ICG Hazard case is currently on appeal to the U.S. Court of Appeals for the Sixth Circuit, which hears appeals of federal cases from Kentucky, Michigan, Ohio and Tennessee. The case was argued nearly a year ago, but the court has not yet issued its decision.
In a case recently decided by the Ninth Circuit Court of Appeals, environmental interest groups and EPA argued for a very narrow version of the permit shield defense in the context of general NPDES permits, in the case of Alaska Community Action on Toxics v. Aurora Energy Services, LLC. In theAlaska Community Action case, the Ninth Circuit ruled that a coal loading facility’s discharge of coal particles into a waterway violated the facility’s general stormwater NPDES permit. The defendant argued that it was entitled to assert the permit shield defense, because the coal particles were not addressed in the stormwater permit but were within the reasonable contemplate of the permitting agency when the permit was issued.
On the other hand, EPA and environmental interest groups argued that the permit shield should almost never apply to a general permit, because general permits do not require detailed applications and disclosures about specific pollutants potentially present in a discharge. The court in Alaska Community Action declined to address whether a the permit shield applies to a general permit, instead holding that the stormwater permit at issue in that case expressly barred the discharge of any non-stormwater pollutant, including coal particles.
In light of the varying decisions of the federal appellate courts, the scope of the CWA permit shield remains uncertain. We will continue to track important cases relating to the permit shield in the Environmental Letter.