On January 4, 2017, the United States Court of Appeals for the Fourth Circuit issued a decision that could severely impact this region’s regulated community. In Ohio Valley Environmental Coalition v. Fola Coal Co., LLC, the Court upheld a decision from the United States District Court for the Southern District of West Virginia in which it determined that Fola Coal Company, LLC (“Fola”) violated the narrative water quality standards of its National Pollutant Discharge Elimination System (“NPDES”) permit by discharging “ionic pollution” in the form of elevated dissolved solids that significantly adversely impacted the chemical, physical, hydrologic, or biological components of the receiving stream’s aquatic ecosystems. See Ohio Valley Environmental Coalition v. Fola Coal Co., LLC, No. 16-1024 (4th Cir. 2017). 

In March of 2013, the Ohio Valley Environmental Coalition (“OVEC”) and two other environmental groups filed an action under the Clean Water Act’s (“CWA”) citizen suit provision alleging that Fola was in violation of W. Va. Code R. §47-30-5.1.f, which was incorporated in Fola’s NPDES permit. This provision states:

The discharge or discharges covered by a WV/NPDES permit are to be of such quality so as not to cause violation of applicable water quality standards adopted by the Department of Environmental Protection, Title 47, Series 2.

Id. (citing W. Va. Code R. §47-30-5.1.f (2009)). OVEC alleged that Fola violated this provision by “discharging ions and sulfates in sufficient quantities to cause increased conductivity in Stillhouse Branch [the relevant receiving stream], which resulted in a violation of water quality standards.” Id. OVEC asserted that this discharge was a violation of two narrative water quality standards contained in Fola’s NPDES permit. Id.

In response to this allegation, Fola argued that its NPDES permit shielded it from all liability under the CWA. Id. Fola asserted that at the time of permit renewal it disclosed the nature of its discharges, including information that its discharges would include ions and therefore by highly conductive, to the West Virginia Department of Environmental Protection (“WVDEP”). Id. Despite this disclosure, the WVDEP declined to establish specific limitations on conductivity in Fola’s NPDES permit. Id. Fola asserted that, because the WVDEP declined to establish specific limitations on conductivity, §47-30-5.1.f of the West Virginia Code of State Rules did not obligate Fola to limit the conductivity of its discharges, even if those discharges resulted in a violation of state water quality standards. Id.

Fola’s argument is premised primarily upon a West Virginia law enacted in 2013, referred to commonly as the “Permit Shield.” The relevant provision states:

All persons affected by rules establishing water quality standards and effluent limitations shall promptly comply with the rules: Provided, That:

(2) For purposes of both this article and sections 309 and 505 of the federal Water Pollution Control Act, compliance with a permit issued pursuant to this article shall be  considered compliance for purposes of both this article and sections 301, 302, 303, 306, 307 and 403 of the federal Water Pollution Control Act and with all applicable state and federal water quality standards, except for any  standard imposed under section 307 of the federal Water Pollution Control Act for a toxic pollutant injurious to human health. Notwithstanding any provision of this code or rule or permit condition to the contrary, water quality standards themselves shall not be considered “effluent standards or limitations” for the purposes of both this article and sections 309 and 505 of the federal Water Pollution Control Act and shall not be independently or directly enforced or implemented except through the development of terms and conditions of a permit issued pursuant to this article. Nothing in this section, however, prevents the secretary from modifying, reissuing or revoking a permit during its term. The provisions of this section addressing compliance with a permit are intended to apply to all existing and future discharges and permits without the need for permit modifications . . . .

W. Va. Code §22-11-6(2) (2013) (emphasis added). Under both Fola and the WVDEP’s interpretation of this provision, an NPDES permit holder need only disclose its discharges to the WVDEP and comply with the WVDEP’s established effluent limits in order to avoid liability under the CWA. Ohio Environmental Coalition v. Fola Coal Co., LLC, No. 16-1024 (4th Cir. 2017).

In upholding the District Court’s decision, the Fourth Circuit opined that §5.1.f of Fola’s NPDES permit was a separate obligation on Fola from the permit’s numeric effluent limits, and that, regardless of whether Fola was in compliance with the established numeric effluent limits, it still must comply with the narrative requirement of § 5.1.f. Id. The Fourth Circuit rejected Fola’s argument that W.Va. Code §22-11-6(2) clearly expressed both the WVDEP’s and the West Virginia Legislature’s intent to shield permittee’s from CWA liability if the permittee can establish compliance with established effluent limits. The Court opined that while this statute shows the WVDEP’s and Legislature’s intent to shield permittee’s from liability from the date of enactment (2013); it does not show that the WVDEP or the Legislature intended for this shield to apply retroactively to permits issued prior to enactment. Id. Because Fola’s permit was issued in 2009, Fola is subject to this narrative criterion separate and independently from the permit’s numeric effluent limits.

Fola also asserted that the Fourth Circuit’s decision in Piney Run Pres. Ass’n v. Cty. Comm’rs further shields it from CWA liability. Fola contended that the Court’s Piney Run decision “held that permit holders who disclose their pollutants to the permitting agency and thereafter comply with the effluent limits in their NPDES permits are shielded from liability under the CWA.” Id. Fola argued that because it disclosed the presence of conductivity in its discharges to the WVDEP, and has complied with the permit’s established effluent limits, it is shielded from the CWA, regardless of whether it violates state water quality standards concerning conductivity. Id. The Fourth Circuit wholly rejected this argument. It opined that its decision in Piney Run expressly held that a permit shields “its holder from liability . . . as long as . . . the permit holder complies with the express terms of the permit and with the Clean Water Act’s disclosure requirements.” Id. (citing Piney Run Pres. Ass’n v. Cty. Comm’rs, 268 F.3d 255, 259 (4th Cir. 2001) (emphasis added). The Court held that because Fola violated the “express terms of [provision 5.1.f.] the permit,” Piney Run was not applicable to the present case. Id.

While the Court’s interpretation of the WVDEP’s and the West Virginia Legislature’s intent in enacting W. Va. Code §22-11-6(2) sounds promising for permittee’s holding NPDES permits issued after the statute’s enactment in 2013, the Fourth Circuit was quick to dispel any glimmer of hope for reliance on this provision in federal CWA actions. The opinion notes the WVDEP’s attempt to remove the language of 5.1.f from NPDES permits in 2015, citing a need for NPDES permits to conform to applicable state laws and regulations. However, this change was not approved by the United States Environmental Protection Agency, and remains a valid and enforceable condition of state-issued NPDES permits. After the Fourth Circuit’s decision, we now know that this provision applies to any discharge violating any state water quality standard, regardless of whether the NPDES permit contains an applicable numeric effluent limit.

The Fourth Circuit’s decision has the potential to impose severe consequences for this region’s regulated community. Under this ruling, NPDES permit holders must account for all discharges from their operations, including those discharges not enumerated as an NPDES permit effluent limitation. This can be a costly consequence, as permittees must sample their discharge for any and all parameters that could potentially violate a state water quality standard. Failure to ensure that all discharges conform to state water quality standards could subject a permittee to a CWA citizen suit.