Fourth Circuit Considers CWA Permit Shield Defense, Again
On October 6, 2016, EPA filed an amicus brief in the Fourth Circuit in Ohio Valley Environmental Coalition v. Fola Coal Co., LLC, No. 16-1024 (“Fola”) supporting a decision from the Southern District of West Virginia. The district court held that discharges from a coal mine that raised conductivity levels violated the Clean Water Act (“CWA”) even though the mine’s permit did not contain express limits for conductivity. The case will test whether West Virginia’s narrative water quality standards, which the mine’s permit incorporated by reference, take precedence over the fact that regulators knew the mine’s discharges might increase conductivity but declined to incorporate conductivity into the permit explicitly. If the court adopts EPA’s position, then the case could significantly impact the scope of the permit shield defense under the CWA.
Background: NPDES Permits and the Permit Shield
As this blog explained previously, under the CWA, no person may
discharge any pollutant into the waters of the United States except in
compliance with the statute (such as, pursuant to a NPDES permit under Section
402). Section 402(k) of the CWA, the permit shield provision, provides that
compliance with a NPDES permit will be deemed compliance with the Act’s other
provisions, including the prohibition against unpermitted discharges. Thus, the
statute insulates the permit holder from liability for discharges that comply
with its permit. The permit shield is important because it gives permits
finality and relieves permittees from having to litigate whether their permits
are sufficiently strict.
The Fourth Circuit set forth the leading test for determining the scope of the permit in its Piney Run decision, which our blog previously discussed. In Piney Run, the Fourth Circuit held that a CWA permit could shield a permittee from liability for discharges of pollutants not specifically listed in the permit, provided that the permit holder adequately disclosed the nature of its discharges during the application process, the discharges were within the reasonable contemplation of the regulator when it issued the permit, and the permittee complied with the express terms of the permit.
Significance of Current Litigation
Fola is significant because it addresses whether the permit shield extends to discharges that violate narrative water quality standards, even though the discharges at issue were adequately disclosed to the regulator and the regulator reasonably contemplated them.
Fola’s permit incorporated certain narrative, non-numerical state water quality criteria. Those criteria prohibited, among other things, surface mining operations that “adversely alter[ed] the integrity of the waters of the State.” The company argues that its permit did not require compliance with these narrative water quality standards, which it views as ambiguous and not objectively measurable. Instead, Fola asserts, the state establishes water quality standards (some of which are narrative, some numerical), and then works to achieve those standards by imposing precise numerical limits on discharges via NPDES permits. Under this system, the state—and not the permit holder—has the burden of determining which limits are necessary to achieve the water quality standards. However, in Fola’s view, once the permit is final, the permit holder should be able to rely on the express limits of the permit to be assured of compliance.
In response, EPA argues that narrative water quality standards are requirements of the permit just like any other, and are subject to enforcement. Because the discharges raised the conductivity of the receiving water to levels harmful to aquatic life, the agency argues that the discharges violated applicable narrative water quality standards. As a result, Fola did not comply with the express terms of the permit. The agency further argued that because Fola had simply violated the express terms of its permit, the permit shield does not apply.