Court Decides Important Mining Case

Right on the heels of the Great Lake Legal Foundation’s success in the Wisconsin’s Supreme Court’s Lake Koshkonong case comes another decisive win for the Foundation’s legal efforts. The U.S. Court of Appeals for the Seventh Circuit has agreed with the position advocated by the Foundation in its Wisconsin Resources Protection Council v. Flambeau Mining Company amicus brief, holding that Flambeau Mining was protected by the “permit shield” from allegations by environmental groups that it violated the Clean Water Act. This is an important decision that will help ensure Wisconsin businesses are protected from frivolous lawsuits.

Facts of the Case
Flambeau Mining Company (Flambeau) operated an active mine in northern Wisconsin from 1993 until 1997. During the time Flambeau operated the mine, the Wisconsin Department of Natural Resources (DNR) regulated Flambeau via a Wisconsin Pollutant Discharge Elimination System (WPDES) permit under the Clean Water Act. (The state of Wisconsin, under the Clean Water Act, is delegated authority by the Environmental Protection Agency to administer the law. The federal Clean Water Act permit is called the “National Pollutant Discharge Elimination System, or NPDES. This term is used interchangeably in this article with WPDES, the federally approved state storm water permit.) Flambeau operated under a mining permit in addition to the WPDES permit.

The DNR eventually decided to terminate Flambeau’s WPDES permit and instead, pursuant to NR § 216.21(4)(a) of the Wisconsin Administrative Code, regulated Flambeau’s storm water discharge under its mining permit. (Wisconsin Administrative Code NR § 216.21(4)(a) allows the DNR to regulate storm water under a WPDES permit, or under a different permit.) According to the DNR, regulating Flambeau under its mining permit allowed the DNR to conduct more frequent inspections of the mine than it could under a separate WPDES permit.

A number of environmental groups later filed a citizen lawsuit under the Clean Water Act alleging that Flambeau discharged copper into navigable waters without a permit. Flambeau argued that the environmental groups’ lawsuit was barred by the Clean Water Act’s “permit shield” provision, which states that if “a [NPDES] permit holder discharges pollutants precisely in accordance with the terms of its permit, the permit will ‘shield’ its holder from CWA liability.” The environmental groups responded that the permit shield did not apply because Flambeau did not have a WPDES permit and that the mining permit did not trigger the Clean Water Act permit shield.

The lower court ruled in favor the environmental groups, holding that the permit shield did not apply, and, therefore, Flambeau was liable for violations of the Act.

Court of Appeals Decision
The federal Court of Appeals reversed the lower court and held that the Clean Water Act’s permit shield provision applied.

The Court of Appeals dismissed the environmental groups’ arguments that Flambeau was not covered by the Clean Water Act’s permit shield because it did not have a WPDES permit. The Court concluded that because Flambeau was told by the DNR that its mining permit served as its WPDES permit, the permit shield protected Flambeau from liability.

The Court of Appeals explained that the DNR’s authority to regulate Flambeau under its Clean Water Act authority was provided by NR § 216.21(4)(a) of the Wisconsin Administrative Code, and that Flambeau had no notice that this administrative rule was potentially invalid.

Therefore, according to the Court, “where the permitting authority issues a facially valid NPDES permit and the permit holder lacks notice of the permit’s (potential) invalidity, we hold that the permit shield applies.” The Court explained that to hold otherwise “would be inconsistent with the requirements of due process.”

The decision is an important victory for Flambeau Mining Company and for all companies that operate under a WPDES permit or other permit approved by the DNR.

Click here to read the amicus curiae brief filed by the Great Lakes Legal Foundation on behalf of Wisconsin Manufacturers & Commerce in this case.


This post originally appeared on the Great Lakes Legal Foundation’s Regulatory Watch blog.