More Chinks in the Permit Shield Armor

Posted on September 24, 2014 by Eric Fjelstad

The history of the Clean Water Act (CWA) permit shield provision was recently addressed in a blog post by David Buente on July 31, 2014.  This post covers an update on one of the referenced cases that was pending before the Ninth Circuit Court of Appeals.  The case Alaska Community Action on Toxics v. Aurora Energy Services, LLC (“ACAT”) involved a facility in Seward, Alaska that conveyed coal onto ships where it was exported into international markets.  The facility had been covered under the Multi-Sector General Permit (“MSGP”) since the mid-1980s.  The MSGP authorized the discharge of stormwater and also identified eleven categories of non-stormwater discharges which were authorized under the MSGP.  None of these categories covered discharges of coal.

The plaintiffs filed a CWA citizens suit in early 2010 alleging that coal was discharged from a conveyor into the ocean during ship loading operations and that these discharges were not covered under the MSGP.  The alleged discharges involved small chunks of coal falling from the underside of the conveyor belt on the “return” trip and incidental dust or chunks unintentionally released during the loading of ships.  The district court granted summary judgment in favor of the facility, applying the principles in  Piney Run Pres. Ass’n v. City Comm’rs, 268 F.3d 255 (4th Cir. 2001).

On appeal, the Ninth Circuit reversed, holding that the MSGP did not cover discharges of coal.  The court found that all non-stormwater discharges were prohibited except those identified in the list of eleven permissible non-stormwater discharges.  The Ninth Circuit’s decision is most striking for what it does not say.  First, there is no discussion in the opinion of the fact that the permittee had, in fact, disclosed its coal discharges during the permitting process.  Second, the court places no weight - indeed, did not even mention - the fact that EPA and its state counterpart actively oversaw the facility, including its discharges of coal.  In contrast, the district court specifically found that all the relevant parties - EPA, the Alaska Department of Environmental Conservation (“ADEC”), and the permittee - viewed the MSGP as extending to discharges of coal.  As the district court found, “the discharges were not only ‘reasonably contemplated’ by EPA, but were actively regulated by the agencies under the General Permit.”

The Ninth Circuit’s decision in ACAT should make any MSGP permittee shudder since it suggests that many facilities may not be properly permitted.  Specifically, if a non-stormwater discharge is not identified on the list of permissible non-stormwater sources, ACAT suggests that discharge is not covered by the MSGP.  The case also reaffirms the point that reliance on agency communications and “course-of-dealing” with agencies can be a perilous exercise.

Time will tell whether the ACAT court’s analysis will be applied outside of the MSGP context to IPs and other GPs.  In the meantime, when considering permit shield issues, permittees and their counsel would be wise to carefully focus on the language of permits and what a permit purports to cover (and not cover).