Monthly Archives: April 2016

Resurrection Bay, Seward, Alaska

SCOTUS won’t hear 9th Cir. NPDES permit case

In June, 2015, the United States Supreme Court declined to review the Ninth Circuit Court of Appeals holding in Alaska Comm. Action on Toxics, et al. v. Aurora Energy Services.  The Supreme Court’s denial came after Aurora and the Alaska Railroad Corp. petitioned the Court for review, asking the Court to reverse the Ninth Circuit’s holding that they said improperly narrowed the Clean Water Act’s (“CWA”) permit shield to allow citizen suits over discharges of pollutants not specified in a NPDES permit.

NPDES Permits Under the CWA

By way of background, Section 301(a) of the CWA prohibits the “discharge of any pollutant” from “any point source” into “navigable waters” unless the discharge complies with certain other sections of the CWA.  One of those applicable sections is section 402, which provides for the issuance of National Pollutant Discharge Elimination System (“NPDES”) permits.  In nearly every case, an NPDES permit is required before anyone may lawfully discharge a pollutant from a point source into navigable waters.

If a pollutant discharger has obtained and complied with a NPDES permit, then they are protected by what is known as the permit shield.  The permit shield protects pollutant dischargers from liability under the CWA, even if the Environmental Protection Agency (“EPA”) promulgates more stringent limitations over the life of the NPDES permit.  However, any violation of the permit’s terms constitutes a violation of the CWA.

Pursuant to section 402, there are two types of NPDES permits: individual and general.  An individual NPDES permit authorizes a specific entity to discharge a pollutant in a specific place and is issued after an informal agency adjudication process.  By contrast, a general NPDES permit is issued for an entire class of hypothetical dischargers in a given geographical region and is issued pursuant to administrative rulemaking procedures.

Once a general NPDES permit has been issued, an entity seeking coverage must submit a “notice of intent” to discharge pursuant to the permit.  The date on which coverage commences depends on the terms of the particular general NPDES permit, and, in some cases, the permit issuer may require a potential discharger to apply for an individual permit.

Multi-Sector General Permit for Stormwater Discharges Associated with Industrial Activity

As it relates to the Alaska Comm. Action case, a NPDES permit is required for stormwater discharges associated with industrial activity.  Under current EPA regulations, “stormwater” is defined as “storm water runoff, snow melt runoff, and surface runoff and drainage.”  “Storm water discharge associated with industrial activity” is defined as “the discharge from any conveyance that is used for collecting and conveying storm water and that is directly related to manufacturing, processing or raw materials storage areas at an industrial plant.”

At issue in the Alaska Comm. Action case was the Multi-Sector General Permit for Stormwater Discharges Associated with Industrial Activity, first issued in 1995 and since reissued in 2000 and 2008.  Specifically, the Ninth Circuit was asked to decide whether defendants’ alleged non-stormwater discharge of coal from the Steward Facility’s conveyor system and ship loading area into Resurrection Bay is covered by a general permit.

The Seward Coal Loading Facility is located on the northwest shore of Resurrection Bay in Seward, Alaska.  Defendant Alaska Railroad Corp. purchased the Seward Facility in 2003.  The facility has been operated by Defendant Aurora Energy Services since 2007.  The facility’s purpose is to receive coal by railcar from the Usibelli Coal mine located in close proximity to Healy, Alaska, and to then transfer that coal onto ships for delivery to out-of-state markets.

Plaintiffs’ Three Claims

The plaintiffs in this case claimed that defendants’ improperly discharged coal into the bay in three different ways: (1) coal falls into the Bay, either directly or as coal dust, during the over-water transfer of coal from the stockpiles to the ship holds; (2) coal dust generated at the stockpiles, and other land-based areas of the Facility, migrate to the Bay as airborne dust; and (3) coal-contaminated snow is intentionally plowed into the Bay and into a pond and wetlands north of the facility.

History of the Seward Facility General Permit

In 1984, the EPA issued the facility its original NPDES permit. In 1999, when it came time to renew their NPDES permit, the EPA advised the facility that its discharges could be regulated under either an individual permit or under the NPDES Multi-Sector General Permit for Stormwater Discharges Associated with Industrial Activities.  In 2001, the facility switched from its individual NPDES permit to the general permit.

In 2009, the facility renewed its general permit.  As a precondition to coverage under the general permit, the facility was required to have developed and implemented a Storm Water Pollution Prevention Plan.

In early February 2010, the EPA and the Alaska Department of Environmental Conservation (“DEC”) conducted a site inspection of the Seward Facility.  The purpose of the inspection was to “ensure that water quality standards and permit requirements [were] being met.”  A significant portion of the inspection report focuses on the coal that enters the Bay from the ship loader area and conveyer belt, and the coal dust the Facility generates.  No violations of the General Permit, the Prevention Plan, or water quality standards generally, were reported.  In August 2011, the Facility was inspected again. Again, no violations were reported.

Ninth Circuit Disagrees that Seward Facility Was Not in Violation of NPDES Permitting Requirements

However, in its opinion, the Ninth Circuit disagreed that the facility had not violated the parameters of the general permit, determining that: 1) the plain terms of the general permit prohibited defendants’ non-stormwater discharge of coal; 2) the court’s analysis was controlled by Part of the general permit, which prohibited the discharges; 3) the court would have reached the same conclusion had it employed the permit shield analysis that has been applied to individual permits; and 4) the district court erred in concluding that the general permit shielded defendants from liability for their non-stormwater coal discharges.

According to the Ninth Circuit:

The plain terms of the General Permit prohibit defendants’ non-stormwater discharge of coal. In Part, the General Permit states: “You must eliminate non-stormwater discharges not authorized by an NPDES permit. See Part 1.2.3 for a list of non-stormwater discharges authorized by this permit.” The referenced section (which is actually Part 1.1.3) lists eleven categories of non-stormwater discharge which are “the non-stormwater discharges authorized under this permit.” None of these categories cover defendants’ coal discharge.

The Ninth Circuit rejected the defendants’ arguments that the list contained in Part 1.1.3 was not meant “to circumscribe the universe of authorized non-stormwater discharges.”  There, the court said:

The section cited by defendants, for instance, governs Sector A, pertaining to timber products facilities. The Seward Facility is classified under Sector AD. This sector does not pertain to any particular industry, but rather is a catchall category for “facilities designated by the Director as needing a stormwater permit, and any discharges of stormwater associated with industrial activity that do not meet the description of an industrial activity covered by Sectors A-AC.” Unlike sections governing other sectors, the section governing Sector AD does not specify additional categories of non-stormwater discharge that are authorized or prohibited. With the possible exception of additional monitoring or reporting requirements that may be imposed, Sector AD facilities are governed only by the permit’s general provisions.

In sum, the court concluded, “Defendants’ non-stormwater coal discharges are not on this list, thus they are plainly prohibited.”

Ninth Circuit Would Have Reached Same Conclusion Under “Permit Shield” Analysis

Having determined that the general NPDES permit did not allow defendants’ coal discharges, the court stated that it would have reached the same result as if the court had employed the permit shield analysis used in the context of individual permits.  In the court’s view:

Under that analysis, a permittee is shielded from liability under the CWA if it (1) complies with the permit’s express terms, and (2) discharges pollutants that were disclosed to and within the reasonable contemplation of the permitting authority during the permitting process. Here, the express terms of the General Permit prohibit defendants’ non-stormwater coal discharges, thus defendants would not be shielded from liability. As our outcome would be the same regardless of whether Piney Run’s analysis applies to general permits, we need not decide whether it does.

Following the Ninth Circuit’s decision, the defendants appealed the decision to the United States Supreme Court.  However, as noted at the outset, the Supreme Court declined to hear their case.  The case will now proceed back to the lower district court for further proceedings.

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U.S. Sixth Circuit Court of Appeals

Clean Water Rule Challenges to be heard by Sixth Circuit

Recently we reported on the stay issued by the Sixth Circuit Court of Appeals to the Clean Water Rule.  The Clean Water Rule was challenged by a number of plaintiffs in various federal district courts and circuit courts around the country.  The plaintiffs filed petitions in both the district and circuit courts based upon what they allege is uncertainty about whether the adoption of the Clean Water Rule is within those actions that must be challenged in a U.S. Circuit Court of Appeals.  After issuing a stay of the Clean Water Rule, the Sixth Circuit Court of Appeals ruled in late February that it would hear challenges to the Rule.

The Clean Water Rule and its Challengers

In June 2015, the Environmental Protection Agency (“EPA”) and Army Corps of Engineers (“USACE”) proposed the Clean Water Rule, which redefined what bodies of water qualify as “waters of the United States” under the Clean Water Act (“CWA”).  The Clean Water Rule’s detractors say the Rule improperly gives the EPA and USACE broad new authority under the CWA, and that federal district courts should first hear the case, not the Sixth Circuit.

A central question before the Sixth Circuit has been whether the federal government was correct in asserting that the Clean Water Rule is an “other limitation,” meaning a limitation on the way the EPA regulates certain pollutant discharges, under section 509(b)(1)(E) of the CWA.

Sixth Circuit Holds it has Jurisdiction Over Challenges to Clean Water Rule

In a close 2-1 panel decision, the Sixth Circuit stated that it had jurisdiction to hear the case.  This is true despite the fact that Sixth Circuit Judges Richard Griffin and Damon J. Keith actually found the Clean Water Rule does not fit into that provision’s parameters, saying they would not review the case on that basis.  Even still, Judge Griffin agreed with Judge David W. McKeague that Section 509(b)(1)(F) of the act, which addresses the issuance or denial of permits, grants the Sixth Circuit jurisdiction.

The groups opposing the Sixth Circuit’s review said that section (F) did not justify jurisdiction in the Sixth Circuit because the Clean Water Rule is not an “action” of the EPA administrator “in issuing a permit.”  Judge McKeague disagreed, siding instead with the EPA’s argument that the effect of the Clean Water Rule is to impact permitting requirements, thereby affecting the granting and denying of permits, which the judge said is enough to bring the Clean Water Rule under subsection (F).

Sixth Circuit Relied on National Cotton Decision in Concluding it has Jurisdiction

Judge McKeague and Judge Griffin relied on the Sixth Circuit’s 2009 ruling in National Cotton Council v. EPA in coming to their conclusion.  In National Cotton, numerous groups challenged a rule that exempted from the CWA’s permitting requirements pesticides applied in accordance with federal law.  The environmental groups that challenged the rule argued that jurisdiction lied in federal court, where the groups had filed an action in the Northern District of California.  The Sixth Circuit disagreed, denying the groups’ motion to dismiss.

In denying the motion, the Sixth Circuit concluded that the rule at issue satisfied subsection 509(b)(1)(F).  In relying on two decisions from the Ninth Circuit, the Sixth Circuit found that a rule falls within the purview of subsection (F) if it regulates the underlying permitting procedures, even if it does not amount to the actual denial of the permit.

In his opinion Judge McKeague said, “The National Cotton court noted that this more expansive reading of subsection (F) encompassed even regulations that exempted certain discharges from permitting requirements.”  Judge Griffin said he disagreed with the National Cotton decision, but was nonetheless bound by it.  Judge Keith disagreed that the National Cotton case gave the Sixth Circuit jurisdiction to hear challenges to the Clean Water Rule.

Sixth Circuit’s Jurisdictional Ruling Comes on Heels of Previous Stay of the Clean Water Rule

As noted the Sixth Circuit’s decision regarding its jurisdiction to hear challenges to the Clean Water Rule was preceded by a stay of the Rule.  There, the Sixth Circuit said the petitioners who opposed the Rule had demonstrated “a substantial possibility of success” on the merits of their claims.  The stay order says the rule is stayed “pending further order of the court,” so it appears the stay will remain in effect even after the court’s jurisdictional ruling, which didn’t make any statement that it would be lifted.

The Sixth Circuit’s jurisdictional decision keeps the EPA from having to litigate approximately 20 different cases in federal district court, no doubt a big relief for the EPA.  This is true because the U.S. Panel on Multidistrict Litigation denied the EPA’s request to have the cases centralized in one court on the grounds that the disputes are based on administrative record and require very little discovery.

Similar Case in the Eleventh Circuit Waited to Hear What Sixth Circuit had to Say

While the Sixth Circuit has determined that it has jurisdiction over challenges to the Clean Water Rule, there is another similar case pending in the Eleventh Circuit in which Florida and 10 other states, including Utah, are seeking to overturn a Georgia district judge’s finding that an appeals court is the proper venue for their challenge to the Clean Water Rule.  In Georgia v. McCarthy, the states argued that federal district courts are the proper place to challenge the Clean Water Rule.  The Eleventh Circuit postponed oral arguments in the case pending a ruling from the Sixth Circuit.

Since the Sixth Circuit has ruled that they had jurisdiction, it is likely the Eleventh Circuit will rule it has jurisdiction as well.  However, this does not mean the end for the battle over the Clean Water Rule.  In fact, it would appear that the fight is just beginning.  Yet, if the Sixth Circuit’s hint in issuing its stay is correct, namely that the petitioners had shown a possibility of success on the merits, then the Clean Water Rule may be in jeopardy.

Contact C/J’s Water Law Team Today

We will continue to follow this case, and will provide any updates as they become available.  If you or someone you know may be impacted by the Clean Water Rule, its stay, any future litigation, or if you have other water law related issues, please contact our water law team for a consultation.

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