On March 20, 2013, the United States Supreme Court held that discharges of channeled stormwater runoff from logging roads were exempt from the National Pollutant Discharge Elimination System (“NPDES”) permitting scheme.1 The case turned on whether or not such discharges were “associated with industrial activity” - if so, then such discharges would not be exempt from NPDES permit requirements.2

The Environmental Protection Agency (“EPA”) argued that the definition of “industrial activity” pertained to operations of a more fixed and permanent nature rather than to the transportation of logging raw materials.3 The Supreme Court agreed and overruled the Ninth Circuit Court of Appeals. The Supreme Court ruled that since the discharges at issue were not “associated with industrial activity,” such discharges did not require NPDES permits because they fell within the Clean Water Act’s general exemption for “discharges composed entirely of stormwater.”4

Background

Congress enacted the Clean Water Act to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.”5 The Clean Water Act requires individuals, corporations and governments to obtain NPDES permits before discharging pollution from any “point source” into the navigable waters of the United States,6 and it defines “point source” as:

[A]ny discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged. This term does not include agricultural stormwater discharges and return flows from irrigated agriculture.7

The EPA has issued regulations to further clarify which categories of discharges qualify as “point sources.” One such regulation, known as the “Silvicultural Rule,” requires an NPDES permit for any discharge from “[s]ilvicultural point sources,”8 which are:

[A]ny discernible, confined and discrete conveyance related to rock crushing, gravel washing, log sorting, or log storage facilities which are operated in connection with silvicultural activities and from which pollutants are discharged into waters of the United States. The term does not include non-point source silvicultural activities such as nursery operations, site preparation, reforestation and subsequent cultural treatment, thinning, prescribed burning, pest and fire control, harvesting operations, surface drainage, or road construction and maintenance from which there is natural runoff.10

Accordingly, most discharges from a logging-related point source require an NPDES permit unless another federal statutory provision exempts that source from coverage. One such provision, 33 U.S.C. § 1342(p)(1), exempts most “discharges composed entirely of stormwater” from the NPDES permitting program. However, this exemption does not extend to stormwater discharges “associated with industrial activity.”11

The 2006 version of the EPA’s “Industrial Stormwater Rule” defined “storm water discharge associated with industrial activity” as:

[T]he discharge from any conveyance that is used for collecting and conveying storm water and that is directly related to manufacturing, processing or raw materials storage areas at an industrial plant. The term does not include discharges from facilities or activities excluded from the NPDES program under this part 122. For the categories of industries identified in this section, the term includes, but is not limited to, storm water discharges from ... immediate access roads and rail lines used or traveled by carriers of raw materials, manufactured products, waste material, or by-products used or created by the facility. ...12

The 2006 version also specified, with one irrelevant exception, that “[f]acilities classified as Standard Industrial Classificatio[n] 24” are “considered to be engaging in 'industrial activity' for purposes of paragraph (b)(14).”13 Importantly, Standard Industrial Classification 24 includes the "logging" industry, defined as “[e]stablishments primarily engaged in cutting timber and in producing ... primary forest or wood raw materials.”14

While the current case was pending before the Supreme Court, the EPA amended its 2006 Industrial Stormwater Rule to specifically clarify that discharges of channeled stormwater runoff from logging roads were exempt from the NPDES permitting program.15 While this amendment clearly disposes of the question as to future NPDES permitting requirements for discharges of channeled stormwater runoff from logging roads, the Supreme Court noted that the current case was not moot since the amendment did not cover past alleged failures to obtain NPDES permits for such discharges.16

The Decker Decision

The Decker case began when the Northwest Environmental Defense Center (“NEDC”) filed a citizen suit in the United States District Court for the District of Oregon, alleging that certain logging and paper-related firms were discharging channeled stormwater runoff into the South Fork Trask River and Little South Fork Kilchis River without NPDES permits.17 When it rained, stormwater would runoff graded roads traveled on by the logging and paper operations, passing through a system of ditches, culverts and channels that ultimately discharged dirt and crushed gravel into nearby rivers and streams.18

The District Court dismissed the suit for failing to state a claim after concluding no NPDES permit was required because the ditches, culverts and channels at issue were not “point sources” under the Clean Water Act or the Silvicultural Rule.19 The Ninth Circuit Court of Appeals reversed, finding that because the Silvicultural Rule was ambiguous, the conveyances at issue must be deemed “point sources” to give effect to the Clean Water Act’s “expansive definition of the term.”20 The Ninth Circuit further held that because the Industrial Stormwater Rule cross-referenced Standard Industrial Classification 24, which covers the “logging” industry, the discharges at issue were "associated with industrial activity."21 Since the discharges were from “point sources” and were not otherwise exempt because they were “associated with industrial activity,” the Ninth Circuit ruled that such discharges required NPDES permits.22

After finding proper jurisdiction and that the case was not moot in light of the EPA’s amended Industrial Stormwater Rule, the Supreme Court reversed the Ninth Circuit Court of Appeals.23 The Supreme Court focused on the definition of “associated with industrial activity” because if the discharges of channeled stormwater runoff were not “associated with industrial activity,” then such discharges would be free from NPDES permitting requirements under the general exemption for “discharges composed entirely of stormwater.”24

In defining “industrial activity,” the Supreme Court found persuasive the EPA’s arguments that the pre-amendment Industrial Stormwater Rule’s reference to “facilities” and Standard Industrial Classification 24’s reference to “establishments” suggested application to sites “more fixed and permanent than outdoor timber-harvesting operations.”25 The Supreme Court also found persuasive the fact that the EPA’s Industrial Stormwater Rule defined discharges associated with industrial activity as those discharges directly related to “manufacturing, processing or raw materials storage areas at an industrial plant,” whereas the logging operation “‘directly related’ only to the harvesting of raw materials.”26 The Supreme Court additionally noted that another reasonable interpretation of the pre-amendment Industrial Stormwater Rule was to read it as requiring “the discharges to be related in a direct way to operations ‘at an industrial plant’ in order to be subject to NPDES permitting.”27 Taken together, the Supreme Court found that the Industrial Stormwater Rule’s language supported the EPA’s interpretation that the regulation only extended to “traditional industrial buildings such as factories and associated sites, as well as other relatively fixed facilities.”28

The EPA’s position was also aided by the standard of review, which entitled the EPA’s interpretation of its own regulation to judicial deference.29 Finally, the Supreme Court noted that the EPA’s interpretation of the regulation had been consistently applied and that further federal regulation would be “duplicative or counterproductive” in light of Oregon’s substantial investment in regulating stormwater discharges within the state.30

Because the Supreme Court found that discharges of channeled stormwater runoff from logging roads were exempt from NPDES permitting requirements since they were not “associated with industrial activity,” it did not address the question of whether the “pipe[s], ditch[es], channel[s], tunnel[s], [and] conduit[s]” at issue met the Clean Water Act’s definition of “point source.”31

Case Significance

The EPA’s November 30, 2012, amendment to the Industrial Stormwater Rule removed future uncertainty as to the permit requirements for discharges from logging roads. The Decker decision also clarified that companies do not have liability for past discharges of channeled stormwater runoff from logging roads conducted without NPDES permits. This decision is significant because the Act allows private parties to file citizen suits to enforce its provisions and to recover attorney fees and costs.32 Moreover, civil penalties for violation of the Act may be severe and may result in fines of up to $25,000 per day for each violation.33

The Decker decision is also significant because of the Supreme Court’s interpretation of the Industrial Stormwater Rule as extending only to traditional industrial buildings, such as factories and associated sites and other relatively fixed facilities. Other transportation or mobile industries should take note of this holding. The same logic could potentially be applied to argue that such operations are not “associated with an industrial activity” and are likewise exempt from NPDES permit requirements.