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Environmental Blog

  • 06
  • April
  • 2015

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Sixth Circuit Extends Permit Shield Test to General Permits

On January 27, 2015, the U.S. Court of Appeals for the Sixth Circuit held in Sierra Club v. ICG Hazard that the defendant’s compliance with the terms of its Clean Water Act (CWA) general permit “shielded” the company from citizen suit enforcement. It is the first case to extend the so-called Piney Run test for permit shield applicability to general permits, rather than individual permits.

Under the CWA, no person may discharge any pollutant into the waters of the United States except in compliance with the statute, for example pursuant to a National Pollutant Discharge Elimination System (“NPDES”) permit under CWA Section 402. There are two kinds of NPDES permits. Individual permits are based on information the permittee provides in its initial application, and, as the Ninth Circuit explained in its 2014 Alaska Community Action on Toxics (ACAT) v. Aurora Energy Services, LLC opinion, “authorize a specific entity to discharge a pollutant in a specific place.” General permits, on the other hand, authorize discharges “for an entire class of hypothetical discharges in a given geographical region,” and are promulgated pursuant to notice-and-comment rulemaking procedures. 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 in compliance with its permit.

The Fourth Circuit first promulgated the now well-established two-part permit shield test in 2001 in Piney Run Preservation Association v. County Commissioners of Carroll County, MD. In Piney Run, the Fourth Circuit held that a CWA individual permit could shield a permittee from liability for discharges of pollutants not specifically listed in the permit, provided the discharges were “within the reasonable contemplation” of the regulator during the permit application process and the permittee complied with the express terms of the permit. ICG Hazard is a precedent-setting case, addressing the applicability of the CWA’s permit shield to a general, as opposed to an individual, National Pollution Discharge Elimination System (NPDES) permit. The Sixth Circuit is the first to extend this test to general permits, finding that ICG Hazard met both prongs of the Piney Run test and was protected from citizen suits.

The Fourth Circuit reaffirmed the Piney Run test in July 2014, and the Court of Appeals for the Ninth Circuit considered it in October 2014. The Ninth Circuit case, Community Action on Toxics (ACAT) v. Aurora Energy Services, LLC, held that the “plain terms” of the Multi-Sector General Permit prohibited defendant’s discharges of coal. The court observed that it would have reached the same result if it had employed the Piney Run test that had been applied to individual permits. Therefore, the court concluded it did not need to decide whether the Piney Run analysis applied to general permits. Industry recently filed a petition for certiorari in the ACAT case.

The Sixth Circuit concluded that the Piney Run test also applied to general permits. It noted that the purpose of the permit shield doctrine was to facilitate EPA’s administration of the NPDES permitting scheme. Without the shield, the court said, “compliance would be impossible and the potential for litigation limitless” because of “the practical impossibility of identifying and limiting every potential compound or chemical in a given discharge.” The same reasoning applied to general permits, the court continued, because “the permitting authority would not only need to identify the many pollutants that a single polluter could discharge, but all of the pollutants and combinations of pollutants that could be discharged by all polluters that may later fall under the general permit.” The court further concluded that both prongs of the Piney Run test, compliance with the express terms of the permit and the permitting authority’s “reasonable contemplation” of the discharge of other pollutants not specifically listed, applied to general permits. It wrote that although “the agency cannot know which specific facilities will seek coverage under the general permit . . . the authority can contemplate the pollutants that may be discharged generally from pollutants that may later be covered by the general permit.” Finally, the court found that the permitting authority reasonably contemplated ICG’s discharge of selenium “because [it] knew at the time it issued the general permit that the mines in the area could produce selenium.” Thus, the general permit shielded ICG from Sierra Club’s suit.

The Ninth Circuit’s ACAT opinion did not address the issue of Piney Run’s applicability to general permits, but the court noted that it would have reached the same result had it employed the Piney Run test. ICG Hazard, in contrast, explicitly extended the Piney Run approach to individual permits. The Supreme Court may use the ACAT petition for certiorari to address the issue and extend the Piney Run test to individual permits nationwide, although there may not be a circuit split at this time.

Posted by Ross Woessner at 04/06/2015 6:15 PM

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