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Southern Appalachian Mountain Stewards v. A&G Coal Corp.


Southern Appalachian Mountain Stewards v. A&G Coal Corp.

On July 11, 2014, the Fourth Circuit Court of Appeals issued a ruling in an appeal of a July 22, 2013, federal district court ruling in Southern Appalachian Mountain Stewards v. A&G Coal Corp. icon-pdf regarding the scope of the protection afforded by Section 402(k) of the Clean Water Act (CWA), commonly referred to as the “permit shield.” The permit shield holds that compliance with a National Pollutant Discharge Elimination System (NPDES) permit is compliance with the CWA.

In January 2014, NACWA joined an amicus curiae brief icon-pdf in order to preserve the permit shield defense. Although the facts of this case dealt with a mining permit, the ruling has implications on all point source dischargers holding NPDES permits, including municipal wastewater and stormwater utilities. The permit shield is vitally important to NPDES permittees to ensure protection against third party lawsuits.
The Fourth Circuit ruled that the mining permittee could not avail itself of the permit shield but upheld EPA’s guidance on the shield and a 2001 favorable decision from the same circuit. NACWA achieved its objectives as an amicus because the ruling (1) narrowed the holding of the lower court decision which had the potential to erode the defense and (2) limited the decision to the facts of the case.

The case involves allegations of unpermitted discharges of selenium from a coal mining operation in southwest Virginia. The permittee did not disclose the potential for selenium discharges in its application and left a question pertaining to the discharge of selenium blank on the permit application form.

A third party challenge arose with regard to the discharge of selenium and the permittee attempted to invoke the permit shield defense, arguing that the permitting agency contemplated but chose not to include effluent limits for selenium in the NPDES permit, and that compliance with the permit constitutes compliance with the CWA.

The U.S. District Court for the Western District of Virginia held that a permittee must have actually disclosed a pollutant in its permit application to avail itself of the permit shield defense.

Basis for NACWA’s Involvement & Key Arguments in the Appeal
Given the importance of the permit shield to NACWA members for protection from citizen suits, NACWA participated in this case to help preserve the permit shield as a strong and robust defense for NPDES permit holders to enforcement actions. NACWA’s participation was part of a broad coalition of diverse groups, including industrial and agricultural point source dischargers, who share a common interest in defending the permit shield defense.

A key argument in the amicus brief was that the lower court decision threatened to diminish the third criterion of EPA’s permit shield policy icon-pdf, which states that the permit shield applies not just where pollutants are (1) specifically limited in the permit or (2) identified in the permit application, but also where they are (3) part of waste streams, operations or processes that are identified in the permit application and supporting administrative record. The third element deals with naturally occurring pollutants that are not specifically disclosed in a permit application or specifically limited in a permit, but nonetheless covered by processes or operations that are identified in the application. This is of critical importance to publicly owned wastewater treatment plants because countless pollutants in any discharge, even in distilled water, would have to be identified and listed.

The lower court decision also seemed to contradict the 2001 Fourth Circuit decision in Piney Run Pres. Ass’n v. Cnty. Comm’rs of Carroll Cnty icon-pdf, in which the court found that the shield extends to pollutants that are not expressly listed in the permit so long as the discharge was within the reasonable contemplation of the permitting authority at the time the permit was granted.

NACWA joined an amicus brief icon-pdf in the Piney Run case in August 2000, successfully arguing that the municipal defendant should not be liable for unlisted pollutants under the CWA's permit shield.

Given NACWA’s strong historical support for the permit shield defense, the importance of the permit shield to NACWA members, and NACWA’s past involvement in litigation on this issue, it was particularly important for the Association to help preserve the positive precedent created by the Piney Run decision.

The Fourth Circuit Ruling
The determinative factor in the recent Fourth Circuit decision was that A&G Coal failed to report selenium, stating it had no reason to believe, at the time of permitting, that it would discharge selenium. The court held that there was no question that A&G was discharging selenium and no question that they had a duty to report the discharge on the permit application. The court found that in this particular case, A&G failed to meet its permit application disclosure requirements and thus never made it to the shield analysis. NACWA’s amicus brief argued that permittees who fill out the application completely and in good faith should be covered by the shield. The ruling from the Fourth Circuit is in line with this interpretation.

The Fourth Circuit did not adopt the lower court’s position regarding the critical third criterion of EPA’s policy and, therefore, left it as a viable permit shield defense in the context of naturally occurring pollutants.  Thus, the decision maintains the key elements of EPA’s permit shield policy and the Piney Run decision, and preserves the permit shield as a robust defense. The key lesson from this ruling for NACWA members going forward is that clean water utilities should be sure to provide complete and accurate responses for all information requested on a discharge permit application.

Rulings/Pleadings (in icon-pdf format)


Piney Run v. Carroll County (in icon-pdf format)


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