Fifth Circuit Strikes Down Clean Water Act Rule for Animal Feedlots

The Fifth Circuit recently struck down an EPA regulation that required Concentrated Animal Feeding Operations (CAFO) to obtain wastewater discharge permits under the Clean Water Act (CWA), even when the facility is not actually discharging wastewater. In National Pork Producers Council v. EPA,[1] industry petitioners challenged EPA’s 2008 rule, which required CAFOs to apply for and obtain National Pollution Discharge Elimination System (NPDES) permits whenever the CAFO “proposes to discharge.” The court held that EPA’s effort to extend the CWA beyond entities that actually discharge – and to seek penalties merely for failing to apply for a permit – exceeds EPA’s authority under the CWA. The case is the latest chapter in nearly a decade-long dispute between environmental groups, industry, and EPA regarding the scope of the federal government’s authority to regulate CAFOs under the CWA.

Background

The CWA prohibits the discharge of pollutants from a point source into waters of the United States without a valid permit, such as an NPDES permit.[2] The CWA expressly includes CAFOs in the definition of a “point source,”[3] and EPA has issued detailed rules that define when a facility qualifies as a CAFO.[4] Unlike the typical CWA “point source,” which is a “discrete conveyance,” CAFOs are deemed point sources due to characteristics of the facility as a whole. EPA authorizes nearly all states to implement the NPDES program for CAFOs, but those states must impose requirements that are no less stringent than EPA’s regulations.

EPA has gone through several rounds of rulemaking proceedings focused on when a CAFO has an obligation to obtain an NPDES permit. In 2003, EPA promulgated a rule that required all owners or operators of CAFOs to apply for NPDES permits, unless they could demonstrate that there was no potential to discharge.[5] In response to a lawsuit brought by members of the regulated community challenging this “duty to apply” portion of the rule, the Second Circuit held in 2005, in Waterkeeper Alliance v. EPA,[6] that the CWA does not authorize EPA to require CAFOs to obtain NPDES permits unless there is an actual, rather than a potential discharge.

EPA responded to the Waterkeeper decision with a 2006 proposed regulation that amended the “duty to apply” rule by requiring only CAFOs that “discharge or propose to discharge” to apply for NPDES permits.[7] In 2008, EPA supplemented and finalized that rule[8] to clarify the circumstances when an NPDES permit is necessary. See M. MacCurdy, EPA Taking Comments on Proposed CAFO Wastewater Discharge Rule, Marten Law Environmental News (Mar. 26, 2008); M. MacCurdy, EPA Finalizes Long-Awaited CAFO Clean Water Act Rule, Marten Law Environmental News (Dec. 18, 2008). The final rule included a requirement that CAFOs apply for NPDES permits if they discharge or “propose to discharge,” where a CAFO proposes to discharge “if it is designed, constructed, operated, or maintained such that a discharge will occur, not simply such that it might occur.”[9] The rule also reiterated that nutrient management plans (NMPs) are an enforceable part of an NPDES permit. CAFO owners or operators that elect not to seek an NPDES permit need not confirm with EPA that the facility does not, in fact, discharge or propose to discharge. However, under the rule, unpermitted discharges would still face potential enforcement and penalties (1) for unpermitted discharges and (2) for failing to obtain a permit.

The rule also included a voluntary certification procedure that attempted to provide a structured, objective set of criteria for owners and operators of CAFOs to follow in determining whether they need to apply for a permit. The rule included eligibility criteria that a CAFO must meet to become zero-discharge certified, such as (1) addressing existing physical and operational conditions to ensure that there will not be a waste discharge, and making accommodations to address changes at the facility; (2) developing, implementing, maintaining, and revising, as necessary, an NMP that ensures that no discharges will occur from the facility; and (3) maintaining documentation underlying the certification. The submission of this information automatically certifies the facility – EPA need neither review nor approve the certification or the NMP.[10] Obtaining certification does not protect a CAFO from liability under the CWA if a discharge in fact occurs. However, it creates a rebuttable presumption that the CAFO does not propose to discharge, and is therefore not liable for the separate violation of having failed to obtain a permit.

Immediately after EPA issued the final rule, both the industry and environmental groups petitioned for review in the Fifth, Seventh, Eighth, Ninth, Tenth and D.C. Circuits, and the lawsuits were consolidated in the Fifth Circuit. Environmental groups alleged, among other things, that the rule impermissibly allowed CAFOs to determine whether they discharge or propose to discharge, and failed to provide adequate regulatory oversight of the accuracy of those assertions. EPA resolved these claims in a May 25, 2010 settlement agreement that, in part, required EPA to immediately publish guidance “designed to assist permitting authorities in implementing the [CAFO regulations] by specifying the kinds of operations and factual circumstances that EPA anticipates may trigger the duty to apply for permits as discharging or proposing to discharge.” On May 28, 2010, EPA issued its guidance titled “Implementation Guidance on CAFO Regulations – CAFOs That Discharge or Are Proposing to Discharge” to meet part of its obligations under the settlement agreement. The guidance focused on the contours of a CAFO’s “objective assessment” of whether it discharges or proposes to discharge, under current regulations, and provides sector-specific guidelines to follow in undertaking this assessment. See M. MacCurdy, EPA Issues Guidance for CAFOs on Scope of Clean Water Act Permitting, Plans Further Rulemaking, Marten Law Environmental News (July 1, 2010).

The Fifth Circuit’s Decision

The Fifth Circuit’s decision in National Pork Council primarily addressed industry plaintiffs’ challenges to the final rule’s requirement that CAFOs have a “duty to apply” for a permit when they “propose to discharge,” and that EPA can levy penalties against CAFOs that fail to apply for a permit.[11] The plaintiffs argued that the CWA only addresses actual, rather than potential discharges, and that EPA lacks authority under the CWA to require CAFOs to obtain permits based on a potential to discharge. The Fifth Circuit agreed, holding that EPA had exceeded its authority by purporting to regulate CAFOs without an actual discharge and to impose penalties for the separate violation of failing to apply for a permit.

The Fifth Circuit began its analysis with a review of the Waterkeeper decision, where the Second Circuit held that EPA’s effort to establish a “duty to apply” for an NPDES permit exceeded EPA’s statutory authority. The Waterkeeper decision is applicable to EPA’s current rule, according to the court, even though EPA now only requires CAFOs to apply for a permit if they “propose” to discharge. EPA’s definition of the phrase “propose to discharge” as “a CAFO designed, constructed, operated, and maintained in a manner such that the CAFO will discharge,” the Fifth Circuit opined, departs from the common understanding of the word “propose,” which is “to form or declare a plan or intention.”[12] Consequently, EPA’s rule characterizes a CAFO as proposing to discharge “regardless of whether the operator wants to discharge or is presently discharging,” and “thus requires CAFO operators whose facilities are not discharging to apply for a permit.”[13] This result, according to the court, “runs afoul of Waterkeeper, as well as Supreme Court and other well-established precedent” that make clear that there “must be an actual discharge into navigable waters to trigger the CWA’s requirements and the EPA’s authority.”[14] While the CWA explicitly authorizes EPA to require CAFOs that are actually discharging to obtain an NPDES permit, and to establish penalties for discharging without a permit, the court concluded that EPA’s attempt to regulate CAFOs that are not actually discharging exceeds EPA’s statutory authority under the CWA.

The court also struck down the “failure to apply liability” portion of the final rule, which imposed penalties for failing to obtain a permit, in addition to penalties for unpermitted discharges. The court reviewed EPA’s explicit authority under CWA § 1311 to issue compliance orders, seek injunctions, and impose civil or criminal penalties when EPA determines that an entity is in violation of explicit provisions of the CWA. “Notably absent from” the list of statutory violations, the court observed, “is liability for failing to apply for an NPDES permit.”[15] Additionally, CWA § 1319 specifically authorizes EPA to seek penalties, but only when an entity has violated explicit provisions in the CWA, such as the prohibition against unpermitted discharges. As a result, according to the court, “the imposition of “failure to apply” liability is outside the bounds of the CWA’s mandate.”[16] Taken together, “the ‘duty to apply,’ as it applies to CAFOs that have not discharged, and the imposition of failure to apply liability is an attempt by the EPA to create from whole cloth new liability provisions. The CWA simply does not authorize this type of supplementation to its comprehensive liability scheme.”[17]

Conclusion

The Fifth Circuit’s decision in National Pork Producers mirrors the Second Circuit’s Waterkeeper decision from 2005 by limiting EPA’s authority to regulate CAFOs under the CWA. A CAFO cannot be required to apply for an NPDES permit unless the facility actually discharges to jurisdictional waters. Moreover, the National Pork Producers decision goes a step further by limiting EPA’s ability to levy additional penalties for a CAFO that merely fails to apply for a permit, even though the facility may yet face liability for an unpermitted discharge. CAFO operators, however, should also examine the permitting authorities in their respective states to determine the reach of the National Pork Producers decision on their operations, because some states impose their own requirements that are broader than those within EPA’s 2008 rule. 

For more information regarding this decision, please contact Meline MacCurdy or any member of Marten Law’s Water Quality practice group.