The Uprising or Downfall of the Clean Water Act’s Permit Shield

Posted on July 31, 2014 by David Buente

            Section 402(k) of the Clean Water Act (CWA) is commonly known as the “permit shield.”  It has been part of the CWA since 1972.  Even seasoned environmental lawyers would not likely need even one hand to count the number of permit shield cases that mattered to one’s practice.  If you fall into this category, it is time to listen up! 

Background.  Section 402(k) states that compliance with a National Pollutant Discharge Elimination System (NPDES) Permit “shall be deemed compliance, for purposes of,” among others, various government enforcement actions and citizens’ suits.  EPA’s regulations make clear that where a party has been issued a permit, if the permit holder complies with the express limits of the permit, the permittee has “the security of knowing that . . . it will not be enforced against for violating some requirements of the [CWA] which was not a requirement of the permit. 45 Fed. Reg. 33,290, 33,311 (May 19, 1980). Federal Register.

            Almost 40 years ago, the Supreme Court in E.I. Du Pont De Nemours & Co. v. Train, confirmed that the purpose of the permit shield is 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 of whether their permits are sufficiently strict.  In short, Section 402(k) serves the purpose of giving permits finality.”

            Train, however, was not the last word on the permit shield.  In 1994, EPA issued a Guidance Memorandum providing its interpretations of the scope of the permit shield.  EPA’s 1994 Guidance explains that:

A permit provides authorization and therefore a shield for the following pollutants             resulting from facility processes, wastestreams and operations that have been clearly identified in the permit application process . . .: (1) Pollutants specifically limited in the   permit or pollutants which the permit, fact sheet, or administrative record explicitly          identify as controlled through indicator parameters.; (2) Pollutants for which the permit authority has not established            limits or other  permit conditions, but which are specifically identified as present in facility discharges during the permit application process; and (3) Pollutants not identified as present [in the facility discharges] but which are constituents of wastestreams, operations, or processes that were clearly identified during the permit application process.

Policy Statement on Scope of Discharge Authorization and Shield Associated with NPDES Permits at 2-3 (July 1, 1994) quoted in In re Ketchikan Pulp Co., CWA Appeal No. 96-7, p. 624 (May 15, 1998).

Shortly thereafter, in 1995, EPA re-issued the July 1994 memorandum entitled Revised Policy of Scope of Discharge Authorization and Shield Associated with NPDES Permits(now known as the “1995 Policy Statement”). The 1995 Policy Statement added qualifying text to the second and third conditions in EPA’s 1994 Guidance document.  In both cases, EPA required that the pollutants for which the permit authority has not established limits or other permit conditions or that were not identified as present but which are constituents of wastestreams, operations or processes had to be “specifically” or “clearly” identified in writing and contained in the administrative record which is available to the public.”  Id. at 2-3.  

Thirteen years later, in Piney Run Pres. Ass’n v. City Comm’rs, 268 F.3d 255 (4th Cir. 2001), the Fourth Circuit held that the permit shield applies to discharges of pollutants not listed in a permit as long as the permittee had adequately disclosed the unlisted pollutants  to the permitting authority.  If the discharger, however, “has not adequately disclosed the nature of its discharges to permit authorities, and as a result thereof the permitting authorities are unaware that unlisted pollutants are being discharged, the discharge of unlisted pollutants has been held to be outside the scope of the permit.”    

            The Piney decision held the day for 13 years with no significant permit shield decisions in the interim. 

Times Are Changing.  After more than a decade of dormancy, the scope of the permit shield is now being tested.  In 2013 and 2014, the DOJ on behalf of EPA has filed – under very quick time frames – two briefs as amici curiae addressing NPDES individual and general permits and providing a more nuanced interpretation of Section 402(k).  DOJ now takes the position that a NPDES permit can shield its holder from liability only where the permit holder (1) complies with the express terms of the permit and with the EPA/State permit application rules; and (2) the permit holder does not make a discharge of pollutants that was not within the reasonable contemplation of the permitting authority at the time the permit was granted.  DOJ made clear that any reliance on prong three from the 1995 EPA guidance “is misplaced” because, in the government’s view, the third prong of the guidance deals with  an entirely different situation – namely, it is intended to cover pollutants where there is no affirmative duty to disclose them during the permit application but where, nonetheless, the applicant has made a complete and adequate disclosure with respect to constituents of wastestreams, operations, or process” that “are clearly identified in writing and contained in the administrative record.  Southern Appalachian Mountain Stewards v. A&G Coal Corp., Case No. 13-2050 (4th Cir.), DOJ Brief at 27.

            Then, earlier this year, the Fourth Circuit issued a sharply-worded decision in  Southern Appalachian  Mountain Stewards v. A&G Coal Corp. upholding a lower court’s decision that A&G was not entitled to the permit shield because nowhere in the NPDES application did A&G state that it would be discharging selenium.  The Fourth Circuit did an about face from its decision in Piney based on upon DOJ’s amicus brief and its new disjunctive test, and held that unlike in Piney,  A&G did not disclose the unlisted pollutant adequately and, thus the permit shield was not available. 

            There are two cases pending before the Sixth and the Ninth Circuits that will address the scope of the permit shield.   The Sixth Circuit case – Sierra Club v. ICG Hazard, Inc. – was argued in April, 2013, and the Ninth Circuit case -- Alaska Community Action on Toxics v. Aurora Energy Services, LLC and Alaska Railroad Corp. --  has just recently concluded the briefing process.  DOJ has filed an amicus brief in the Alaska Community Action case which is substantially similar to the one submitted in the A&G Coal litigation.

            Once these decisions are rendered, there may well be a circuit split giving the Supreme Court the opportunity to become the final arbiter of the scope and meaning of Section 402(k)’s permit shield.



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