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Clean Water Act: Sixth Circuit to Decide Whether NPDES General Permit Shields Wastewater Dischargers from Suits for Pollutants Not Specifically Identified

June 13, 2013

An appeal before the Sixth Circuit, Sierra Club v. ICG Hazard, addresses whether an entity in compliance with a general permit under the Clean Water Act’s (CWA) National Pollutant Discharge Elimination System (NPDES) program may yet be subject to a citizen suit or enforcement action for discharges of any pollutants that are not explicitly covered by the permit. The district court rejected this argument in the proceedings below,[1] holding that the “permit shield” in the NPDES provisions protected the defendant surface coal mining company from a CWA claim related to selenium discharges that were not explicitly covered by the NPDES general permit. A reversal on appeal could impact permits nationwide.

Statutory Background

The CWA prohibits the discharge of a “pollutant” into waters of the United States from a “point source” without a permit, such as an NPDES permit. The “permit shield” provision in section 402(k) states that compliance with an NPDES permit “shall be deemed compliance with” other provisions of the act, including the broad prohibition for unpermitted discharges. The provision is intended to provide the permittee with assurances that the permittee can avoid the otherwise strict liability of the CWA so long as the permittee obtains and complies with an NPDES permit.

The permit shield does not by its terms differentiate between the two categories of NPDES permits: individual permits, which are tailor-made to a specific facility, and general permits, which cover discharges from a class of dischargers (identified according to specific factors)[2] and do not usually contain site-specific requirements. General permits are far more common and far less cumbersome to acquire. Whereas a discharger can often obtain a general permit by merely filing a “notice of intent” to obtain coverage, an individual permit requires a formal application from the permittee, development of a draft permit with site-specific requirements, and opportunity for public comment. However, general permits contain the same basic elements in individual permits—including effluent limitations, water quality standards, monitoring and sampling requirements—and are equally enforceable.

District Court Decision in Sierra Club v. ICG Hazard

The district court decision in ICG Hazard addressed the issue of whether the permit shield equally protects holders of general permits and individual permits. That case involved a citizen suit action under the CWA and the Surface Mining Control and Reclamation Act (SMCRA) against a surface coal mining company in Kentucky. The defendant held a Coal General NPDES Permit issued by the state agency. In conjunction with the defendant’s application for modifications to its NPDES permit to support operational expansions, sampling data from the defendant’s outfalls showed selenium in the discharges—a substance that the NPDES permit did not specifically authorize. The plaintiff alleged that the defendant violated the terms of its NPDES permit due to (principally) unpermitted selenium discharges.

Describing the purpose of the CWA’s permit shield, the district court stated that it was intended to “insulate permit holders from changes in various regulations during the period of a permit and to relieve them 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.”[3] The parties agreed that the scope of this protection for holders of individual permits includes pollutants that are: listed in the permit; identified in the permit, fact sheet, or administrative record as controlled through indicator parameters; specifically identified as present at the facility through the application process and in a record available to the public; and not identified at the facility, but present in wastestreams, operations, or processes clearly identified during the application process or in a record available to public. In other words, according to the district court, “the holder of an individual permit is able to discharge pollutants within limits established by the permit, and a permit holder can lawfully discharge any pollutants not listed as long as proper disclosure was made during the permitting process.”[4]

The plaintiff argued that the permit shield should have a narrower scope in the general permit context since applications for general permits do not require the same level of disclosures as individual permits. The district court disagreed, stating that “[t]he only significant difference” between individual and general permits is that “a larger share of the responsibility for the information gathering process leading up to the development of a general permit falls on the permitting authority rather than on the permit applicants.”[5] The district court noted that general permits are only available after the permitting authority has determined that classes of discharges meet the regulatory requirements, and that the permitting authority can subject general permittees to different effluent limitations and monitoring if necessary. As a result, according to the district court, “by virtue of being deemed eligible for a general permit, the permitting agency has held that it can properly regulate a class of dischargers without detailed information about individual disclosures, but the permitting agency also has flexibility to institute specific control mechanisms as necessary. Therefore, if a general permit is insufficient in some respect, the complaint should be directed at the permitting authority.”[6] Moreover, the district court noted that permitting authorities are required to “solicit information to the extent it is needed to ensure that permit seekers will comply with the law,” and that “[a]ny information deficit is the fault of the permit writer and the government entities that approved that permit.”[7]

The plaintiff also argued that EPA guidance limits the permit shield for general permits to only those discharges within the “specified scope” of a particular permit. In the plaintiff’s view, this limitation reflects the scope of disclosures in general permits and, accordingly, restricts the shielded pollutants to only those listed in and limited by the general permit. The district court rejected this argument, stating that “general and individual permits require the same levels of compliance from permittees, and permittees are subject to the same types of enforcement. In that context, it would be anomalous to hold that the permit shield would apply differently based on the type of permit held by a discharger. That is especially true when the EPA has unequivocally stated that a general permit and an individual permit are identical.”[8] In support, the district court cited to other courts that, in its view, reached the same conclusion.[9]

On this basis, the district court granted summary judgment for the defendant on the CWA claim. The district court observed that the “disclosure requirements are different for individual and general permits,” but “only insofar as which party bears the burden for disclosure.”[10] That is, the permittee bears the burden in the individual permit context to “disclose all chemicals, wastestreams, and processes,” whereas, “[w]ith regard to general permits, the permitting agency bears the burden for understanding the pollutants that might be discharged and writing the permit with appropriate limitations.”[11] The district court also held that the permit shield protected the defendant from a claim under the SMCRA based on alleged violations of water quality standards from point source discharges of selenium.

Appeal to the Sixth Circuit

The plaintiff in the district court proceedings appealed the district court’s ruling in January 2013 and briefing has recently concluded. The plaintiff-appellant raises two arguments on the CWA issue. First, the appellant alleges that the permit shield for general permits only covers pollutants within the “specified scope” of the permit, in part because general NPDES permits do not follow detailed disclosures that happen with individual permits describing the applicant’s proposed discharges. Because the limited disclosure does not allow the permitting authority to evaluate fully the environmental impacts of discharged pollutants, according the appellant, the scope of the permit shield is narrow. Second, the appellant argues that the selenium discharges are not shielded under the “reasonable contemplation” standard applicable to interpretation of individual permits, because the permitting authority did not adequately consider the potential for selenium discharges and the appellee did not disclose this potential to the agency. According to the appellant, the district court erred by failing to consider this standard and determining that it was irrelevant to the scope of a permit shield for any general permit. Based on legislative history and judicial interpretations of the purpose of the permit shield, the appellant argues that it is only meant to protect a permittee from intervening changes in appropriate effluent standards during the life of an existing permit.

Responses by Defendant-Appellee and Amici

Joining the defendant-appellee in responding to the appellant is a collection of industry groups,[12] representing agriculture, timber, development, mining, and water utility interests. With respect to the CWA permit shield issue, which is the focus of the amicus briefs, the parties all seek to persuade the Sixth Circuit that the CWA’s permit shield provides equal protection to general and individual NPDES permits. The parties detail the case law, regulatory developments, and excerpts from EPA guidance in an effort to underscore this point, focusing on the purpose of the permit shield and the ramifications of reading it narrowly.

For example, the appellee and amici point out that the range of pollutants in a particular waste stream is potentially limitless while also ancillary to the environmental target of a given permit. To avoid this result, the parties argue that the “specified scope” of a general permit relates to the types of pollutants that are typical in the waste stream for the category of discharger that a particular general permit is designed for. With respect to the appellant’s “reasonable contemplation” argument, the appellee contends that: (1) the permitting authority bears the burden of understanding the nature of discharges in a general permit; (2) the permitting authority need only understand the waste streams of the permittee; and (3) in this case, the permitting authority had actual knowledge that the permittee’s discharges may have contained selenium.

The amici also stress that, although the case arises in the coal mining context, it raises concerns applicable a multitude of different types of NPDES general permits. Accepting the appellant’s argument that the permit shield only covers discharges of pollutants that are expressly listed in the general permit, according to amici, would cause entities covered by general permits to lose the finality that is central to the permitting scheme. The amici also urge the Sixth Circuit to consider the legal and economic impacts of siding with the appellants. With ineffective protection from an enforcement action or citizen suit despite compliance with a general permit, the amici argue, entities could forego this risk and instead pursue individual permits. According to amici, the costs and delay that would result could overwhelm permitting agencies, impact development and financing, and ultimately raise prices on consumers.

At the time of this writing, oral argument before the Sixth Circuit has not been scheduled.

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

[1] Sierra Club v. ICG Hazard, LLC, 2012 WL 4601012 (E.D.Ky. Sept. 28, 2012).

[2] 40 C.F.R. § 122.28(a)(2)(ii)(A)-(E).

[3] ICG Hazard, 2012 WL 4601012 at *5 (internal quotation and citation omitted).

[4] Id. at *6 (citation omitted).

[5] Id. at *7 (internal quotation and citation omitted).

[6] Id. (internal quotations and citation omitted).

[7] Id.

[8] Id. at *8.

[9] See id. at *8-9 (citing and describing cases).

[10] Id. at *9.

[11] Id.

[12] The parties to the amicus brief are: American Farm Bureau Federation, American Forest & Paper Association, American Petroleum Institute, Chamber of Commerce of the United States of America, CropLife America, National Association of Home Builders, National Mining Association, and Utility Water Act Group.

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