District Court exposes vulnerability in Clean Water Act permit shield

Last week, in Southern Appalachian Mountain Stewards, et al. v A&G Coal Corp., No 2:12CV00009 (W.D. Va.), the U.S. District Court for the Western District of Virginia held that the Clean Water Act’s permit shield does not protect a NPDES permittee from liability for discharging a pollutant that it did not disclose in its permit application.  Nothing new there.  What’s notable about this decision, however, is that the court found that this principle applies even when a permittee neither knew nor had any reason to believe that it would discharge the undisclosed pollutant at the time that it submitted its permit application.  The decision offers some important reminders for NPDES permittees who seek to avail themselves of the permit shield defense.

The Virginia Department of Mining, Minerals, and Energy (DMME) issued A&G Coal Corporation (A&G) a NPDES permit to discharge certain pollutants to a number of streams from a mine that A&G owns and operates in Virginia.  Selenium, a naturally occurring chemical element harmful to aquatic life above certain concentrations, was not among the pollutants that the NPDES permit expressly authorized A&G to discharge.  Members of the environmental organization Southern Appalachian Mountain Stewards (SAMS) conducted water monitoring downstream from the mine that detected high levels of selenium, likely exposed during surface mining operations.  After providing the requisite notice to A&G that it was discharging selenium without the necessary authorization, SAMS and other environmental organizations filed a citizen suit seeking to address the alleged violations.  In its briefs on cross motions for summary judgment, A&G, although admitting to discharging selenium from one of its surface mines, argued that the permit shield protected it from liability for those discharges.

Section 402(k) of the Clean Water Act essentially makes compliance with a NPDES permit the equivalent of compliance with the Act.  The provision is often referred to as the “permit shield,” because it protects dischargers who hold valid NPDES permits from liability for discharges that would otherwise constitute violations of Act.  EPA has interpreted Section 402(k) to shield NPDES permittees from Clean Water Act liability for discharging pollutants not specifically identified in their permit when either the pollutants themselves or the wastestreams, operations or processes giving rise to those pollutants were clearly identified during the permit application process.  Finding this to be a reasonable interpretation and affording it deference, courts considering the scope of Section 402(k) have held that the provision shields a permittee from liability under the Clean Water Act for discharging pollutants not identified in its permit if the permittee disclosed the nature of its discharges during the application process and if the pollutants were within the reasonable contemplation of the permitting authority at the time the permit was issued.

A&G argued that it satisfied these requirements.  First, A&G asserted that, at the time that it submitted its permit application, it adequately disclosed the nature of its discharges (i.e., bituminous coal mining) and that it neither knew nor had any reason to believe that it would discharge selenium.  Second, A&G asserted that the possibility of a selenium discharge was within the reasonable contemplation of DMME, which was generally aware of elevated selenium levels in the geographic area in which A&G proposed to mine.  The court disagreed, finding that the selenium discharges were not within the reasonable contemplation of DMME at the time that it issued A&G its NPDES permit.  Interestingly, the undisputed fact that A&G neither knew nor had any reason to believe that it would discharge selenium from its mine site ended up cutting against A&G in the court’s permit shield analysis, as the court concluded that “the evidence simply does not support a conclusion that DMME contemplated what A&G did not.”  The court granted summary judgment to the plaintiffs.

As a general rule, if a NPDES permittee wishes to avail itself of the permit shield defense, it should timely comply with the notification requirements set forth at 40 C.F.R. §§ 122.41(l) and 122.42 upon learning that it is or will be discharging a pollutant that it did not disclose in its permit application.  Following the Southern Appalachian Mountain Stewards decision, this rule applies not only to a permittee making planned alterations to its facility that will change the nature of the pollutants that it discharges, but also, as was the case with A&G, to a permittee that learns that it is discharging a pollutant that it neither knew nor had any reason to believe that it would discharge at the time that it submitted its permit application.  One hopes that regulators and environmentalists would be charitable towards permittees who, through no fault of their own, find themselves in this predicament but who take immediate steps to rectify the situation.  Monitor-only permitting requirements and reasonable compliance schedules should not be out of the question.