Rejects Permit Shield Defense

By a published decision released on July 11, 2014, the U.S. Court of Appeals for the Fourth Circuit affirmed a district court decision out of the Western District of Virginia finding that A & G Coal Corporation (“A & G”) could be sued under the federal Clean Water Act’s “citizens suit” provision for discharging a pollutant that is not expressly regulated by its National Pollutant Discharge Elimination System (“NPDES”) permit. (Southern Appalachian Mountain Stewards, et al. v. A & G Coal Corporation- Appeal No. 13-2050).

The case was brought by the Sierra Club and other regional public interest groups as plaintiffs, although the United States was noted as an “amicus” (friend) supporting those groups in the appeal.

The essence of the decision addressed A & G’s effort to assert the so-called “permit shield” provision in the Clean Water Act, which absolves a permittee from any liability for discharges that are in compliance with its NPDES (water discharge) permit. Beginning in at least 2001, the Fourth Circuit has imposed a condition on use of the permit shield defense: that the permittee fully complied with the permit application requirements before its NPDES permit was issued. (Piney Run Pres. Ass’n. v Cnty. Comm’rs, 268 F.3d 255- 4th Cir. 2001). 

Here, the Fourth Circuit agreed that A & G did not fully satisfy those requirements, because it did not comply with a Virginia regulation that requires permit applicants to test their discharge streams for the presence of selenium and include the results in the permit application. As a result, A & G’s lack of actual knowledge of selenium in its discharges was deemed irrelevant. 

Because A & G failed to sample and test as required, the existence of selenium in the discharges from A & G’s mining operation was also not within the “reasonable contemplation” of the State permitting authority at the time the NPDES permit was issued – which, under Piney Run, is a second condition to successfully invoke the permit shield defense. 

Noting that the permit shield is an affirmative defense and that the defendant bears the burden of proof on such an issue, the Fourth Circuit found that it would “tear a large hole in the [Clean Water Act]” to allow A & G to use it in these circumstances. This decision thus places a substantial premium on strict compliance with all applicable regulations, policies and forms when completing an application for a NPDES permit, and leaves the permittee (rather than the permit-issuing agency) at risk if there are any omissions during that process.