However, several recent federal court decisions are understandably causing concern for permit shield holders.

Background of the Permit Shield

The CWA provides that "the discharge of any pollutant by any person shall be unlawful," unless it falls within certain narrowly prescribed exceptions. The primary exception to the environmental law is the National Pollutant Discharge Elimination System (NPDES), which provides for the issuance of permits allowing the discharge of pollutants within prescribed limits.

Section 402(k) of the CWA contains a “permit shield” provision for dischargers that obtain NPDES permits. It states that “[c]ompliance with a permit issued pursuant to this section shall be deemed compliance” with various sections of the statute that detail effluent limitations and their enforcement.

In E.I. Du Pont De Nemours & Co. v. Train, the Supreme Court confirmed that the intent 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.”

The Fourth Circuit Court of Appeals provided further guidance in Piney Run Pres. Ass’n v. City Comm’rs. It held that a permit holder is exempted from liability for the discharge of pollutants not expressly mentioned in the permit, provided the discharges meet two prongs. The permit holder must comply with the CWA's reporting and disclosure requirements and the discharges must be within the permitting authority's "reasonable contemplation." As further explained by the appeals court, if the discharger “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.”

Most recently, the Sixth Circuit (Sierra Club v. ICG Hazard) upheld the permit shield's application in the context of a general permit. The appeals court concluded that ICG satisfied the first prong of Piney by disclosing a selenium discharge. With regard to the second prong, the court held that ICG's discharge of selenium was within the permit issuer’s “reasonable contemplation” because it knew at the time it issued the general permit that the mines in the area could produce selenium.

Recent Legal Developments

The test established in Piney had been systematically applied for over a decade. However, private litigants and the Department of Justice have recently begun to challenge the scope of the permit shield.

However, the Sixth Circuit’s stance on the permit shield is not universal. In 2014, the Ninth Circuit (Alaska Community Action v. Aurora Energy Serv.) and the Fourth Circuit (Southern Appalachian Mtn. Stewards v. A & G Coal Corp.) issued decisions that narrowed the scope of the permit shield. The Ninth Circuit held that the plain terms of a general permit prohibited the defendants' discharge of coal because it was not included in a list of non-stormwater discharges authorized by the permit. Similarly, the Fourth Circuit found that A & G Coal Corp. failed to satisfy the Piney test because it failed to adequately disclose that selenium would be discharged.

Together, the inconsistent appeals court rulings have generated more questions than answers. Aurora Energy recently appealed the Ninth Circuit’s ruling to the U.S. Supreme Court, arguing that the “Ninth Circuit’s decision… overrides the permitting agency’s decision, and nullifies the permit shield.” The justices have not yet considered the petition.

Given the uncertainty, current and future permit holders are advised to consult with experienced counsel to determine the best way to navigate the current legal landscape and minimize their liability.