Court Rejects Claims that Valley Fill Discharges are Unpermitted Discharges: Relies on Broad Application of “Permit Shield”
September 30, 2019
A federal court in Virginia has ruled in favor of a coal operator in a citizen suit filed under the Clean Water Act, the Surface Mining Act and RCRA. See Southern Appalachian Mountain Stewards (“SAMS”) v. Red River Coal Company, Inc., No. 2:17-cv-00028 (W.D. Va. Sept. 24, 2019). There, Red River has held a combined NPDES/SMCRA permit (“Permit”) since 1992 for a surface mining operation. As part of that operation, Red River constructed a number of excess spoil valley fills. Underlying each fill is an “underdrain” of broken rock that drains water along a previously-existing natural stream channel into a sedimentation pond. Each pond outlet was accorded an NPDES outlet number and assigned effluent limits.
In 2014, however, the Virginia DMLR authorized Red River to remove these ponds, presumably after determining that the company was able to meet effluent limits without treatment. Later, DMLR authorized the “deletion” of one outlet and the “relocation” of others to upland “on-bench” locations that rarely discharge. Nonetheless, the underdrains continued to discharge elevated levels of total dissolved solids/conductivity—pollutants never expressly regulated by the NPDES permit before the ponds were removed. After the ponds were removed, the discharges were not subject to any express effluent limits.
SAMS sued Red River, arguing that, after the State DMLR deleted the outlets, the underdrain discharges were unpermitted point source discharges under the CWA. SAMS also argued that the underdrains were discharging dissolved solids in concentrations sufficient to adversely affect aquatic life in violation of State water quality standards—a condition prohibited by state and federal SMCRA rules. And, alternatively, SAMS argued that, if the discharges were groundwater and not point source, then they were nonetheless subject to injunctive relief under RCRA. The Court disagreed.
It ruled that, while the underdrains were “point sources,” they nonetheless fell within the broad protection of the Clean Water Act’s “permit shield.” As a consequence, the discharges were considered permitted for the purposes of the CWA. Because the discharges were considered “permitted” under the CWA, the Court also held they were not actionable under SMCRA because the “savings clause” of that Act prohibits its application in a way that undermines the CWA. Finally, because SAMS had stated that it would pursue a RCRA claim only if the Court determined the underdrains were not point sources, the court declined to consider a claim under that statute.
The ruling takes a broad view of the CWA permit shield. The court noted at the outset “even where a permit does not expressly authorize certain discharges … they may be allowed under the permit shield of the CWA.” The permit shield, it explained, applies when: 1) a permit holder complies with the express terms of the permit and with the CWA’s disclosure requirements; and 2) the discharges of the pollutants at issue were within the reasonable contemplation n of the permitting authority when the permit was issued.
Here, the Court determined that Red River was complying with its Permit and that it had provided all the information it was required to submit to the State DMLR. Further, it found that all the facts concerning the nature and quality of the discharges from the valley fill underdrains were known by the State. This, the Court determined, was a sufficient basis for finding the “permit shield” applied.
SAMS sought to limit the scope of the “permit shield,” arguing that it “only protects discharge of unlisted pollutants from listed point sources.” Here, it argued, the point sources themselves were no longer subject to the Permit and therefore not “shielded.” The Court rejected that argument, citing a recent federal case from Tennessee observing that “[n]othing in the text of the permit shield … suggests it should apply differently to violations based on the location of the discharge than it does to violations based on which pollutants are involved.” Slip op. at 29 (citing Tennessee Clean Water Act Network v. TVA, 206 F. Supp. 3d 1280, 1300 (M.D. Tenn. 2011), rev’d on other grounds, 905 F.3d 436 (6th Cir. 2018)).
What is more surprising than the breadth of the shield applied by the Court is that the Permit did not itself have outlet-specific limits for the underdrains. At one time, all of the underdrains and their associated ponds were subject to express permit limits for pollutants such as iron, manganese, pH and suspended solids; however, when Red River was able to achieve the applicable limits without treatment, the DMLR effectively excused Red River from further compliance, despite recent controversy over the role of TDS/conductivity and its aquatic impacts.
Here, after the DMLR deleted the outlets, EPA objected to a 2015 draft Permit renewal. EPA opposed the Permit’s failure to expressly regulate discharges from the underdrains with limits on TDS/conductivity sufficient to ensure compliance with the aquatic life use criterion of Virginia’s water quality standards. Despite the outstanding objection, the DMLR renewed the Permit without express limits on the underdrain discharges, a fact that caused EPA to declare the Permit “invalid.” See 40 C.F.R. § 123.44 (authorizing EPA to issue NPDES permits in lieu of approved state authorities where state has failed to satisfy EPA objection). The Court noted the disagreement between DMLR and EPA but did not address or resolve it.
Having disposed of SAMS’ claim that the underdrain discharges were unpermitted, the Court turned to SAMS’ SMCRA claims. State surface mining rules require compliance with all applicable state and federal water quality laws and rules, including those that prohibit significant impacts to aquatic life. SAMS argued that discharges of TDS/conductivity from the underdrains were causing these prohibited affects. The court, however, relied on a similar decision from Kentucky to reject the claim. Slip op. at 31 (citing Sierra Club v. ICG Hazard, LLC, 781 F.3d 281 (6th Cir. 2015)). There, the court determined that the SMCRA “savings clause” (“nothing in this chapter shall be construed as superseding, amending, modifying or repealing” the CWA) prevented the use of SMCRA to impose effluent limits or requirements that fell outside the CWA permit shield.
Finally, the Court did not address the RCRA claims because SAMS had advanced it as an alternative only if the Court had determined the underdrains were not “point sources” subject to the NPDES program.
 Notably, the court observed that unlike the NPDES permits historically issued in West Virginia, the Permit here did not include a “catch-all” provision prohibiting any discharges that contribute to violation of water quality standards. Had there been such a provision, SAMS might have prevailed on a claim that the discharges were not shielded because they were violating an express provision of the Permit. See OVEC v. Fola Coal Co., LLC, No. 16-1024 (4th Cir. 2017).