Defending Against Citizen Suits

Under Environmental Laws Navigating Notice, Standing, Jurisdiction, Settlements

and More Under RCRA, CERCLA, CWA and CAA

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

TUESDAY, JANURARY 6, 2015

Presenting a live 90-minute webinar with interactive Q&A

Christopher L. Bell, Shareholder, Greenberg Traurig, Houston

Richard O. Faulk, Partner, Hollingsworth, Washington, D.C.

Kirsten L. Nathanson, Partner, Crowell & Moring, Washington, D.C.

CLIENT ALERTPrevailing Defendants Forego $6.4 Million Attorney’s Fees Award In Broad Clean Air Act Citizen Suit Settlement

Dec.23.2014

Owners of the Big Brown coal-fired power plant in Texas have agreed to forego an award of $6.4 million in attorney's fees they obtained against Sierra Club in a Clean Air Act (CAA) citizen suit last summer in exchange for the environmental group's agreement not to pursue certain CAA claims against other facilities, to release all claims against the companies to date, and to withdraw a Freedom of Information Act (FOIA) request to the U.S. Environmental Protection Agency (EPA). With this settlement, the companies traded a laudable but uncertain fee award―which was on appeal and may have been in jeopardy because fees are not normally assessed against public interest groups—for much broader (and assured) benefits, including (i) avoiding millions of dollars in future litigation fees and expenses and (ii) foreclosing the risk posed by pending and threatened litigation.

Defense Verdict and Attorney's Fee Award

In 2012, Sierra Club filed suit against Luminant Generation Company (Luminant) and Energy Future Holdings Corporation (EFHC) alleging that the Big Brown coal-fired power plant in Freestone County, Texas had violated Sections 304 and 505 of the Clean Air Act (CAA). See Sierra Club v. Energy Future Holdings Corp. et al., No. 6:12-cv-00108 (W.D. Tex. filed May 1, 2012). Although the Texas Commission on Environmental Quality (TCEQ) investigated plaintiff's allegations and determined the plant had not violated its Title V permit, Sierra Club still brought suit and alleged that Big Brown's emissions had violated the opacity and particulate matter (PM) limits in the Texas State Implementation Plan or "SIP," the plant's Title V Permit, and the CAA.

The group's suit survived a motion to dismiss in 2013, but was ultimately unsuccessful. The U.S. District Court for the Western District of Texas granted partial summary judgment in favor of EFHC and Luminant on the basis that there were no violations of PM limits at Big Brown. The court then held a three-day bench trial on the opacity issues in February 2014, ultimately agreeing with defendants and the TCEQ that no violations occurred because the CAA and the Title V permit allow opacity events under certain circumstances and permitted the particular events at Big Brown (e.g., emissions during startup, shutdown, maintenance, or malfunction events).

The court also determined that an award of the costs of litigation, including attorney's fees, was appropriate under CAA Section 307(d), 42 U.S.C. § 7604(d), which provides for an award of the costs of litigation "to any party, whenever the court determines such award is appropriate." The court also applied the standard in

Christianburg Garment Co. v. EEOC, 434 U.S. 412, 422 (1978), which permits a fee award to prevailing defendants if the plaintiff's claims were "frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so."1 The court further held that a heightened standard should apply when a defendant prevails because of the public policy interest in allowing plaintiffs to pursue legitimate (even if not airtight) claims.

Even under a heightened standard, the court found that plaintiff's claims were frivolous, unreasonable, or groundless. Thus, it determined that defendants were entitled to an attorney's fee award and that defendants' requested fees and costs were reasonable, save a conditional appellate fee sum of $300,000.2

The court considered the following factors:

Defendants had successfully defended against all of Sierra Club's claims. Sierra Club was unable to show a prima facie PM violation and that claim was dismissed at the summary

judgment stage. Sierra Club was aware that Big Brown's Title V permit exempted certain opacity-producing activities,

rendering the opacity claim meritless. At trial, Sierra Club failed to prove either causation or injury-in-fact for its sole standing witness or any

other person (indeed, the standing witness was not even placed on the witness list). Sierra Club insisted on keeping EFHC as a defendant, even though it knew it had no role in the

ownership or operations of Big Brown. TCEQ had determined that no CAA violations had occurred. Sierra Club admitted that it failed to analyze or investigate TCEQ's investigation reports before filing suit. Sierra Club's suit had caused "immense discovery, expense, and use of judicial resources."3

The court also determined that the number of hours billed and billing rates were reasonable and that the legal issues presented and damages requested had justified defendants' use of out-of-district counsel whose home-market rates applied. Moreover, those same attorneys were working to defend a similar case brought by Sierra Club in a neighboring district and "[r]etaining two separate legal teams strictly composed of local counsel in each case would have been highly inefficient and a waste of resources." The court also noted that "Defendants, unlike Plaintiff, did hire local counsel who assisted in the case."4 The court thus awarded $6,446,019.56 to EFHC and Luminant for fees and costs.

The Parties' Broader Settlement

After Sierra Club appealed the fee award to the Fifth Circuit Court of Appeals in September 2014, EFHC and Luminant used that award as a bargaining chip to secure wider and assured benefits. In exchange for the companies' agreement not to enforce that judgment, Sierra Club agreed to drop all current and currently threatened lawsuits against Luminant and EFHC.5 The group agreed to withdraw its pending petition to EPA asking the agency to object to the renewal of several of Luminant's operating permits, to dismiss its suit against EPA alleging failure to timely respond to that petition,6 and to release all past claims against EFHC occurring prior to and through the effective date of the settlement.

Sierra Club further agreed to withdraw a FOIA request to EPA seeking certain documents produced by Luminant concerning a New Source Review case involving its Martin Lake steam electric station and the Big Brown plant, the disclosure of which Luminant had sued to block in March on the basis that it would cause competitive harm by offering a glimpse into the company's operations, market positions, and strategies.7 Instead, the company will provide those documents under a sealing or protective order. Luminant and EFHC also agreed not to object to Sierra Club's intervention in the EPA's August 2013 suit alleging violations of the CAA at the Martin Lake and Big Brown facilities under certain negotiated limitations to intervention.8

With that agreement, Luminant and EFHC have traded an uncertain fee award, which could have been reversed or reduced by the Fifth Circuit or otherwise been uncollectable in full, for much broader and more valuable elimination of potential liability and risk. As they explained to the U.S. Bankruptcy Court for the District of Delaware – which must approve the settlement because EFHC and its subsidiaries are undergoing Chapter 11 reorganization – "resolving each cause of action through the civil litigation process would take several more years, cost millions of dollars in additional fees and expenses, and would be a distraction to the Debtors' business operations. Furthermore, . . . due to the inherent uncertainty of litigation, there is a risk that the Settling Debtors will not be able to recover the full $6.45 million amount of the Fee Award and might not prevail on all other threatened and pending litigation."9

Implications

The fee award in this case may have wide-reaching implications for entities faced with citizen suits. For decades, citizen plaintiff groups have been able to receive attorney's fees when they prevail or settle, with little to no risk for filing unsuccessful suits. Defendants typically have not sought attorney's fees when they prevail against such citizen suits in large part because they see that effort as futile. The district court's order puts the possibility of fees back into play and serves as persuasive precedent defendants can rely on in seeking such fees. Some commenters believe it could provide some measure of deterrence to citizen groups contemplating such actions.

This case also provides an interesting illustration of how defendants who face multiple citizen suits might relieve themselves of substantial liability and risk by leveraging a fee award to secure a broader settlement.

* * * *

For a copy of the district court's opinion on opacity, click here. The court's order on attorney's fees is available here, the motion to the bankruptcy court to approve the settlement is here, and the settlement agreement may be found here. For our previous alert on the motion to dismiss in this case, click here.

1 In addition, the court relied on 28 U.S.C.§ 1927, which permits a fee award against an attorney who "multiplies the proceedings in any case unreasonably and vexatiously."

2 See Order, Sierra Club v. Energy Future Holdings Corp., No. 6:12-cv-108 (W.D. Tex. Aug. 29, 2014) [Dkt. 305].

3 Id. at 14.

4 Id. at 16.

5 Sierra Club had filed suit against Luminant and EFHC alleging violations of the CAA at Luminant's Martin Lake Steam Electric Station, see Sierra Club v. Energy Future Holdings Corp., No. 5:10-cv-00156 (E.D. Tex. filed Sept. 2, 2010), and Big Brown Generating Station, see Sierra Club v. Energy Future Holdings Corp., No. 6:12-cv-108 (W.D. Tex. filed May 1, 2012). The group also sent notice-of-intent-to-sue letters to EFHC and its subsidiaries alleging CAA violations at Luminant's Monticello Steam Electric Station and Sandow Power Station Unit 4.

6 See Envtl. Integrity Project & Sierra Club v. McCarthy, No. 14-1196 (D.D.C. filed July 16, 2014).

7 See Luminant Generation Co. v. EPA, No. 4:14-cv-172 (E.D. Tex. filed Mar. 25, 2014).

8 See United States v. Luminant Generation Co., No. 3:13-cv-03236 (N.D. Tex. filed Aug. 16, 2013).

9 See Motion of Energy Future Holdings Corp, et al. For An Order (A) Authorizing Entry Into And Performance Under The Settlement Agreement Between Certain Of The Debtors And Sierra Club Pursuant To Section 363(b) Of The Bankruptcy Code And Rule 9019 Of The Federal Rules Of Bankruptcy Proceedings And (B) Modifying The Automatic Stay at 5, No. 1:14-bk-10979 (Bankr. D. Del Nov. 24, 2014) [Dkt. 2865].

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Kirsten L. NathansonPartner – Washington, D.C.Phone: 202.624.2887Email: knathanson@crowell.com

David ChungCounsel – Washington, D.C.Phone: 202.624.2587Email: dchung@crowell.com

Sherrie A. ArmstrongAssociate – Washington, D.C.Phone: 202.624.2522Email: sarmstrong@crowell.com

CLIENT ALERTCITIZEN SUIT WATCH: Ninth Circuit Precludes RCRA Citizen Suit Challenges to Diesel Emissions

Sep.23.2014

Not persuaded by plaintiffs' concerns over a purported "gap" in the regulation of diesel railyard emissions in the Clean Air Act (CAA), the Ninth Circuit held that any gap in the regulation of diesel emissions from railyards as indirect sources under the CAA could not be filled by citizen suit enforcement under the Resource Conservation and Recovery Act (RCRA). The court reasoned that the emission of diesel particulate matter (DPM) does not constitute the "disposal" of solid waste within the meaning of RCRA because the small solid particles in DPM are emitted directly into the air rather than placed on land or water as required by the statute's definition of "disposal." The court's broad ruling in Center for Community Action and Environmental Justice v. BNSF Railway Co. has implications for all diesel exhaust emitters and could foreclose future RCRA citizen suit challenges to air emissions beyond DPM.

District Court Decision

Several plaintiff organizations filed suit under RCRA's citizen suit provision1 in the U.S. District Court for the Central District of California in 2011 alleging that DPM emitted by diesel engine locomotives, trucks, and other equipment in California railyards owned and operated by the defendants presented an imminent and substantial endangerment to health and the environment in violation of RCRA. Members of plaintiffs' groups2 live in the vicinity of defendants' railyards and relied upon determinations by the California Air Resources Board (CARB) and the U.S. Environmental Protection Agency (EPA) that DPM is likely to be carcinogenic to humans. According to plaintiffs, defendants' railyards collectively emitted over 160 tons of DPM in to the air in 2005, and plaintiffs argued that Congress left an unintentional loophole in regulating those emissions under the CAA: only the federal government may regulate new locomotive emissions but the federal government may not regulate indirect sources of air pollution like railyards.

In an unpublished decision, the district court granted defendants' motion to dismiss, holding that the CAA comprehensively regulates diesel exhaust by prohibiting federal indirect source regulation in a way that leaves no room for RCRA regulation without creating an impermissible conflict with the CAA. The district court reasoned that "[a]pplying RCRA to indirect sources of air pollution would thwart congressional intent and render the statutory prohibition meaningless. It would be unreasonable to assume that even though Congress expressly prohibited federal indirect source regulation under the [CAA], it implicitly intended to regulate indirect source

emissions through the citizen suit provision of RCRA."3 The district court also held that, even if there was no conflict between the two statutes, DPM is not a "solid or hazardous waste" subject to RCRA regulation.4

Ninth Circuit Ruling

The Ninth Circuit affirmed the district court's dismissal, but on different grounds—RCRA's definition of "disposal."5 RCRA defines "disposal" as discharging, depositing, injecting, dumping, spilling, leaking, and placing any solid waste or hazardous material into or on any land or water so that the waste may enter the environment or be emitted into the air or discharged into any waters.6 That definition does not include the act of emitting and, by its terms, it includes only conduct that results in the placement of solid waste "into or on any land or water."7 That placement, in turn, must be so that solid waste may enter the environment, be emitted into the air, or discharged into water. As a result, the unanimous three-judge panel determined that RCRA "'disposal' occurs where the solid waste is first placed 'into or on any land or water' and is thereafter 'emitted into the air.'"8

By contrast, the alleged solid waste at issue in this case (DPM) was not first placed onto land or water, but was first emitted into the air. The court held that to adopt plaintiffs' argument and hold that emissions of DPM qualified as a RCRA disposal "would effectively . . . rearrange the wording of the statute—something that we a court, cannot do."9 In addition, because other provisions of RCRA do include the act of emitting, such as the definition of the term "release," the court found that Congress knew how to define "disposal" to include emissions but chose not to.10

The court rejected plaintiffs' invitation to glean Congress' intent that air emissions be regulated under RCRA from Section 7002 of that statute, which empowers EPA to monitor and control air emissions at hazardous waste treatment, storage, and disposal facilities, because that provision does not provide a private right of action.11 Similarly, RCRA's citizen suit provision does not permit individuals to bring suit to enforce Section 7002. The court thus declared that "the fact that RCRA permits the EPA to regulate air emissions is not to say that it provides 'any person,' by way of its citizen suit provision, a private right of action with respect to those emissions."12

The court then examined the legislative history of both the CAA and RCRA to guard against the possibility that the statute's definition of "disposal" could be deemed ambiguous, concluding that the regulation of locomotives and locomotive engines was given exclusively to EPA while the regulation of railyards, as indirect sources of air pollution, was expressly (albeit permissively) left to the states. RCRA does not apply to either. Instead, RCRA was intended to reduce the volume of waste left in landfills and governs land disposal. The CAA does govern air pollutants, but railyards are indirect sources of pollution and as such are excluded entirely from federal

regulation. Although plaintiffs sought to close that regulatory "gap," Congress was entitled to leave the regulation of indirect sources like railyards to the states and the court was not free to override that decision.

Implications

The Ninth Circuit's decision marks the first time that an appellate court has ruled on whether a RCRA citizen suit may be used to challenge diesel emissions. That ruling now forecloses plaintiffs' groups' attempts in that circuit to extend the reach of RCRA citizen suits to diesel exhaust as well as RCRA challenges to emissions beyond diesel that are emitted directly into the air rather than onto land or water. Although plaintiffs may attempt their theory in other jurisdictions, the Ninth Circuit's clear textual analysis of RCRA should serve as a useful tool against those suits.

For a copy of the court's ruling, click here.

Click here for a previous alert on the district court decision.

* * *

1 42 U.S.C. § 6972(a)(1)(B).

2 Plaintiffs are the Center for Community Action and Environmental Justice, East Yard Communities for Environmental Justice, and Natural Resources Defense Council.

3 Ctr. for Cmty. Action & Envtl. Justice v. Union Pac. Corp., No. 2:11-cv-08608, 2012 WL 2086603, at *5 (C.D. Cal. May 29, 2012).

4 42 U.S.C. § 6903(3), (27).

5Ctr. for Cmty. Action v. BNSF Ry. Co., No. 12-56086, -- F.3d --, 2014 WL 4085860 (9th Cir. Aug. 20, 2014).

6 42 U.S.C. § 6903(3).

7 Id.

8 Ctr. for Cmty. Action, 2014 WL 4085860, at *4.

9 Id.

10 See 42 U.S.C. § 6991(8).

11 Id. § 6942(n).

12 Ctr. for Cmty. Action, 2014 WL 4085860, at *5.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Kirsten L. NathansonPartner – Washington, D.C.Phone: 202.624.2887Email: knathanson@crowell.com

David ChungCounsel – Washington, D.C.Phone: 202.624.2587Email: dchung@crowell.com

Sherrie A. ArmstrongAssociate – Washington, D.C.Phone: 202.624.2522Email: sarmstrong@crowell.com

CLIENT ALERTFederal District Court Finds Clean Water Act Violations Based on Elevated Levels of 'Conductivity'

Jul.01.2014

In the latest salvo in the conductivity and water quality debate, the Southern District of West Virginia held that high levels of conductivity in surface water violate state narrative water quality standards. After two days of testimony by Plaintiffs' experts about conductivity and the effect of discharges of excessive amounts of ionic pollution on mayflies in mountain streams, the court rejected the State of West Virginia's view that conductivity is not a reliable or valid indicator of stream health. The court instead gave deference to EPA's conductivity benchmark, announced in 2011, that determined that the level at which conductivity begins to impair aquatic life is 300 µS/m.

The court also held that the "overwhelming scientific evidence" presented at trial demonstrated that levels of conductivity in excess of 1,000 µS/m, and frequently above 3,000 µS/m, cause or materially contribute to a significant adverse impact to the chemical and biological components of a stream's aquatic ecosystem in violation of state narrative water quality standards. The court's ruling is the first that establishes Clean Water Act violations based on conductivity via citizen suit enforcement.

Background

In Ohio Valley Environmental Coalition, et al. v. Elk Run Coal Co., et al., 3:12-cv-00785 (S.D. W. Va.), plaintiff environmental groups sued two surface mining operations under the citizen suit provisions of the Clean Water Act and the Surface Mining Control and Reclamation Act (SMCRA).1 Plaintiffs alleged that the mine operators violated their permits by discharging excessive amounts of dissolved solids pollution into nearby streams. In Plaintiffs' view, those discharges increase the ability of the water in those streams to pass an electrical current in contravention of West Virginia's narrative water quality standards. Those standards are violated if discharges cause or materially contribute to conditions that adversely alter the integrity of the waters of the state. The narrative standards also provide that no significant adverse impact to the chemical, physical, hydrologic, or biological components of aquatic ecosystems shall be allowed.2

Plaintiffs alleged that Elk Run and Alex Energy's discharges into Laurel Creek and Robinson Fork, respectively, resulted in conductivity above 1,000 µS/m, and often exceeding 3,000 µS/m, and that substantial and increasing impacts to aquatic life occur as conductivity increases beyond 300 µS/m. They also alleged that samples from

the streams revealed failing West Virginia Stream Condition Index (WVSCI) scores below the biological impairment threshold score of 68.3 In support of these arguments, Plaintiffs relied on EPA's conductivity benchmark and offered testimony from numerous scientific experts.

By contrast, Defendants argued that Plaintiffs could not use a citizen suit to effectively create a water quality-based effluent limit for conductivity, which another federal district court had determined, in National Mining Association v. Jackson, 880 F. Supp. 2d 119 (D.D.C. 2012), to be beyond EPA's reach. Defendants also contended that the court should defer to the West Virginia Department of Environmental Protection's (WVDEP) determinations (expressed in a guidance document) that high conductivity levels do not cause low WVSCI scores and that a low WVSCI score cannot, standing alone, determine compliance with narrative water quality standards. In particular, Defendants asserted that the court owed deference to the portion of WVDEP's guidance that provided that the proper WVSCI at which a steam may be listed as "impaired" under Section 303(d) of the Clean Water Act is 60.6, not 68. Similarly, Defendants argued that the court owed deference to the West Virginia Legislature's instruction, in a concurrent resolution and a senate bill, that compliance with such standards must be determined holistically, not using a single measure like conductivity. Finally, Defendants presented impeachment expert testimony at trial in an attempt to discredit Plaintiffs' expert testimony about the link between conductivity and stream impairment.

The Court's Opinion

The court held a two-day trial on jurisdictional and liability issues, followed by post-trial briefing. After considering all testimony and arguments, the court held that Plaintiffs had established by a preponderance of the evidence that Defendants had committed at least one violation of their Clean Water Act and SMCRA permits by discharging high levels of ionic pollution that increased the waters' electrical conductivity in violation of the West Virginia narrative water quality standards incorporated into those permits.

As a threshold matter, the court rejected Defendants' contention that a verdict in Plaintiffs' favor would effectively create a conductivity water quality effluent limit, which EPA was prevented from doing in National Mining Association v. Jackson, 880 F. Supp. 2d 119 (D.D.C. 2012).4 The court distinguished the National Mining Association case because it involved EPA's Final Guidance document, while the document relied on by Plaintiffs was "an entirely different document" released in March 2011, entitled "A Field-Based Aquatic Life Benchmark for Conductivity in Central Appalachian Streams" (known as "EPA's Benchmark").5 Although the court in National Mining Association determined that EPA had exceeded its authority under the Clean Water Act and SMCRA by using a guidance document to effectively establish a region-wide water quality standard for Appalachia, the court held that, in this case, EPA acted within the "core of its authority" by publishing a scientific study within the area of its expertise exploring the causal relationship between conductivity levels and biological impairment.6 Moreover, because this case did not involve a "direct assertion of regulatory authority by the EPA,"

but instead was a citizen suit that used EPA's Benchmark as one of several scientific studies to support Plaintiffs' theory of general causation, the court concluded that the National Mining Association case was inapposite.7

The court also held that WVDEP's August 12, 2010 guidance denouncing the use of conductivity and WVSCI scores as water quality measures was not entitled to deference, noting that citizen suits such as this are particularly appropriate where the regulator will not command compliance. Again, in pertinent part, WVDEP's guidance instructed that high conductivity levels did not cause low WVSCI scores and that a WVSCI score, standing alone, cannot determine compliance with West Virginia narrative water quality standards but that aquatic health must be measured holistically.8 The court declined to substitute what it saw as "the WVDEP's general judgment that there is no causative effect between high conductivity and low WVSCI scores" for what it deemed to be "the extensive scientific evidence in this case which reveals precisely this causative effect."9

Moreover, the court found that WVDEP's guidance was not persuasive because it discredited the use of WVSCI scores to determine stream health without proposing an alternative. The court found that to be an abdication of enforcement responsibility that had brought WVDEP's enforcement of narrative water quality standards to "nearly a stand-still."10 The court held instead that it would credit EPA's conclusion that a WVSCI score below the impairment threshold of 68 indicates a violation of West Virginia's narrative water quality standards. WVSCI scoring was the most recent methodology used by WVDEP and is still used by EPA, in the exercise of its Clean Water Act Section 303(d) authority, to determine whether West Virginia streams are biologically impaired.11 The Court emphasized that EPA is the "final authority" regarding whether a state's narrative water quality criteria are being violated for purposes of Section 303(d) and that EPA has specifically found that WVSCI scores under 68 violate West Virginia's narrative water quality criteria.

The court was not persuaded by the West Virginia Legislature's recent pronouncements (House Concurrent Resolution 111 and Senate Bill 562) that a holistic approach to stream health should not rest on conductivity. The court dismissed H.C.R. 111 as a concurrent resolution that could not modify West Virginia's narrative water quality standards outside of the constitutionally mandated procedures for modifying legislative rules. And although Senate Bill 562 was a duly enacted statute, it merely instructed WVDEP to promulgate legislative rules which will provide a new measurement of compliance with the biological component of the state's narrative water quality standards and that will include an evaluation of the holistic health of the aquatic ecosystem. Those standards have not yet been promulgated.

Having decided that it was free to exercise its own judgment without affording deference to WVDEP and the West Virginia Legislature, the court went on to credit Plaintiffs' general and specific theories of causation. The court scrutinized EPA's Benchmark, which found that salts, measured by conductivity, were a common cause of impairment of aquatic macroinvertebrates in Central Appalachian streams, ruling out other potential confounding effects like habitat. The Benchmark also found that mountaintop mining with valley fills was a

substantial source of conductivity, concluding that the chronic aquatic life benchmark value for conductivity in West Virginia streams is 300 µS/m. Plaintiffs' experts testified that the Benchmark was authored by esteemed scientists and had undergone a rigorous, extensive peer-review process. The court held that, because the Benchmark falls within the agency's special area of expertise and had been subjected to peer review, the court would defer to EPA's assessment that mountaintop mining with valley fills is a substantial source of conductivity in adjacent streams and that high conductivity in streams causes significant biological impairment to (and the localized extinction of) aquatic macroinvertebrates.

However, even without giving EPA such deference, the court held that evidence of additional scientific studies and testimony presented by Plaintiffs was sufficiently compelling to support their allegation that surface mining causes high levels of conductivity that impairs aquatic health and stream quality. "In the face of such overwhelming scientific evidence," the court concluded that: (1) controlling for other potential confounding factors, high conductivity causes, or at least materially contributes to, a significant adverse impact to the chemical and biological components of aquatic ecosystems (proof of which can be shown through low WVSCI scores), and (2) surface mining causes, or at least materially contributes to, high conductivity in adjacent streams.

The court further credited Plaintiffs' expert testimony on specific causation. The court found that Plaintiffs' sampling near Defendants' operations established a pattern over time where conductivity had increased and WVSCI scores decreased. Conductivity in the subject streams was historically very low and has increased dramatically since mines have been operating in the area. In addition, the court found the taxonomic changes to the benthic macroinvertebrate community revealed that conductivity was the primary cause of biologic impairment. For example, organisms in unimpacted Appalachian streams (known as reference streams) which are sensitive to high conductivity but not very sensitive to habitat degradation, especially mayflies (Ephemerotera), were historically present in the streams near Defendants' operations but were now entirely absent in one creek and almost entirely absent from the other. Organisms known to proliferate in high conductivity environments were also present in large numbers. The court was not persuaded otherwise by Defendants' expert, who critiqued Plaintiffs' experts' conclusions but did not conduct any independent causal analysis. His testimony was, in the court's view, adequately rebutted by Plaintiffs' experts.

The court concluded that the chemical and biological components of the aquatic ecosystems in Laurel Creek and Robinson Fork have been significantly adversely affected by Defendants' discharges. The court found that the chemistry of the streams had been dramatically altered with high levels of conductivity, which the scientific testimony had demonstrated to be seriously detrimental to aquatic life, reducing species diversity and resulting in failing WVSCI scores. The court called conductivity "the canary in the coal mine," finding that, as streams lose diversity in aquatic life, sensitive species are extirpated, and only pollution-tolerant species survive.12 In the court's view, once-thriving ecosystems that support the downstream water quality relied upon by West

Virginians for drinking water, fishing and recreation, and economic uses had been impaired by Defendant's discharges. Consequently, the court held that Defendants had committed at least one violation of their Clean Water Act and SMCRA permits.

Interestingly, the court's conclusions contrast dramatically with a ruling by the West Virginia Supreme Court issued days before Judge Chambers' opinion, which held that there was not "adequate agreement in the scientific community" that conductivity, sulfates, and total dissolved solids cause harm to aquatic life and violate the state's narrative water quality standards. See Sierra Club v. Patriot Mining Co. et al., No. 13-0526 (W. Va. May 30, 2014), Slip Op. at 10, available here.

Implications

This case marks a dramatic shift in the ongoing debate about the use of conductivity to measure water quality impacts. It is the first time a court has rejected the views and findings of both a state legislature and a state regulatory agency in favor of federal guidance and third party expert testimony presented in a citizen enforcement action. It is also the first time that elevated conductivity levels formed the basis for violations of narrative water quality standards and a Clean Water Act permit. What is unclear is whether this battle over water quality impacts from elevated levels of conductivity is limited to Appalachian streams and surface coal mining, or whether the court's findings and rationale put other categories of sediment-bearing discharges at risk in the future.

To read the court's opinion, click here.

1 See 30 U.S.C § 1270(a)(1); 33 U.S.C. § 1365(a)(1) (CWA).

2 See W. Va. Code R. § 47-2-3.3.e, -3.2.i.

3 WVSCI is a bioassessment tool that WVDEP employed from 2002 to 2010 to determine whether streams were biologically impaired under Section 303(d) of the Clean Water Act, 33 U.S.C. § 1313(d)(1)(A). As the court explained, WVDEP and the West Virginia Legislature have determined that WVSCI is not an adequate bioassessment tool, and that an alternative method of measuring stream health should be developed, but the agency has not yet proposed a replacement. EPA still relies on that tool in reviewing the state's 303(d) list of impaired waters, however, and the court determined that it was still a valid measure of stream health, particularly in the absence of an alternative.

4 For more information about that case, see http://www.crowell.com/NewsEvents/AlertsNewsletters/all/Federal-Court-Rejects-EPA-Attempts-to-Regulate-Eastern-US-Coal-Mining-and-Sets-Aside-EPA-Final-Guidance.

5 The Final Guidance at issue in National Mining Association drew heavily on EPA's Benchmark. For more information on EPA's Benchmark, see http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=233809.

6 See Slip Op. at 8-9.

7 Id. at 9.

8 See http://www.dep.wv.gov/pio/Documents/Narrative/Narrative%20Standards%20Guidance%20Justification.pdf.

9 Slip op. at 11.

10 Id. at 21.

11 In March 2013, the EPA Region III Administrator partially approved and partially disapproved West Virginia's 2012 Section 303(d) list of impaired waters based on WVDEP's "flat refusal" to use WVSCI scores to determine whether violations of the biological narrative water quality standards are occurring. Pending completion and adoption by rulemaking of a new methodology pursuant to Senate Bill 562, WVDEP has taken the position that it is precluded from evaluating waters using WVSCI scores.

12 Slip op. at 66.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Kirsten L. NathansonPartner – Washington, D.C.Phone: 202.624.2887Email: knathanson@crowell.com

David ChungCounsel – Washington, D.C.Phone: 202.624.2587Email: dchung@crowell.com

Sherrie A. ArmstrongAssociate – Washington, D.C.Phone: 202.624.2522Email: sarmstrong@crowell.com