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Environmental Blog

  • 19
  • December
  • 2013


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Could the permit shield become a fig leaf?

The Sixth Circuit Court of Appeals is currently considering a case that has the potential to narrow the scope of the Clean Water Act’s (CWA) permit shield. On October 8, 2013, the panel heard oral arguments in Sierra Club v. ICG Hazard, LLC. The case is an appeal of a ruling by the District Court for the Eastern District of Kentucky holding that the permit shield protected a CWA general permit holder from liability even though the permit did not expressly allow for the specific discharge at issue.

The CWA, 33 U.S.C. § 1251 et seq., generally prohibits “the discharge of any pollutant by any person” into navigable waters of the United States. However, discharges are allowed when they occur pursuant to a National Pollution Discharge Elimination System (NPDES) permit issued by EPA or a state permitting agency. NPDES permits are issued under section 402 of the CWA and set limitations on the discharge of specific pollutants. NPDES permits can be issued as either general or individual permits. General permits are issued for categories of similar operations and discharges and impose the same limitations and monitoring requirements for the entire class of discharges. An individual permit is issued for a specific facility only and the limitations are developed based on the information provided in the permitee’s initial application.

Section 402(k) of the CWA, codified at 33 U.S.C. § 1342(k), is the permit shield provision. This section provides that compliance with a NPDES permit will be deemed compliance with the other provisions of the Act, including the prohibition against unpermitted discharges. In 2001, the Fourth Circuit Court of Appeals addressed the scope of the CWA permit shield, holding that an individual permit holder was shielded from liability for discharging pollutants not listed in its permit if it adequately disclosed the nature of its discharges during the application process and if the pollutants being discharged were within the “reasonable contemplation” of the permitting authority at the time the permit was issued.1 The United States Supreme Court has explained that the permit shield’s purpose is “to relieve [permit holders] of having to litigate in an enforcement action the question whether their permits are sufficiently strict. In short, [the permit shield] serves the purpose of giving permits finality.”2

At issue in Sierra Club v. ICG Hazard, LLC is whether the permit shield equally protects holders of general and individual permits. In its application for a discharge permit, ICG Hazard disclosed that there was a potential for selenium discharges in excess of water quality standards. It then received a general permit that did not contain effluent limitations for selenium. In the district court proceedings, Sierra Club argued that the permit shield could not protect ICG Hazard’s discharges of selenium based on its general permit because the permit did not contain specific effluent limitation for selenium. Sierra Club argued that the permit shield should only apply to discharges specifically within the scope of a general permit.

The district court rejected Sierra Club’s argument and granted summary judgment for ICG Hazard. The court held that the permit shield protected holders of general and individual permits equally and that any complaints regarding the sufficiency of a permit should be directed at the permitting authority.

On appeal, Sierra Club argues that the permit shield can only be applied to pollutants specifically within the scope of a general permit. In response, ICG Hazard and several other industry groups argue that Sierra Club’s interpretation of the permit shield could lead to unlimited and unforeseeable liabilities.

In addition to this case, the extent of the permit shield coverage has been the focus of several other recent cases. For example, in August 2013, the Seventh Circuit held that a mining company was allowed to rely upon the permit shield defense with respect to its stormwater discharges, without any NPDES permit at all, because the Wisconsin Department of Natural Resources had stated that stormwater discharges would be regulated through mining permits after the closure of the mine instead of a NPDES permit. The panel found that, where a permit holder was told it no longer needed a permit, due process considerations precluded enforcement for failing to have the permit.

Also, in Southern Appalachian Mountain Stewards v. A&G Coal, the Western District of Virginia held in July 2013 that a permittee must fully disclose information about its discharge of the pollutant to the permitting agency in order for the permit shield to be available. A&G Coal had not identified selenium discharges on its NPDES application and, the court held, A&G was not even aware of any selenium discharges when the application was made. Since A&G did not know of the selenium discharge, the court held that the Virginia Department of Mining, Minerals, and Energy could not have “reasonably contemplated” it in generating the NPDES permit. A&G filed its appeal of this decision on August 22, 2013 and the Fourth Circuit is currently preparing to consider the case.

1Piney Run Pres. Ass’n v. Cnty. Comm’rs of Carroll Cnty., Md., 268 F.3d 255, 267-68 (4th Cir. 2001).
2E.I. du Pont de Nemours & Co. v. Train, 430 U.S. 112, 138 n.28 (1977).

Posted by Theresa Romanosky at 12/19/2013 4:52 PM

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Theresa Romanosky

Theresa Romanosky Senior Associate