The U.S. Environmental Protection Agency will gather information about factory farms to determine whether more should be regulated as part of a settlement with environmental groups concerned about water pollution.

The EPA reached the settlement Tuesday with the Natural Resources Defense Council, Sierra Club and Waterkeeper Alliance.

The groups filed a federal lawsuit in the 5th Circuit Court of Appeals in New Orleans in early 2009, claiming the EPA gave too much discretion to farm operators in determining which farms needed permits to discharge waste into waterways.

The settlement requires the EPA to gather information about factory farms that don’t have discharge permits and determine whether they should be regulated.

Natural Resources Defense Council attorney Jon Devine said it could improve pollution control standards for factory farms.

“This settlement puts the EPA on the path to collecting more data about factory farms and it will in turn give us the tools we need to determine which ones are polluting and how best to regulate them,” Devine said.

The EPA acknowledged the settlement Wednesday night and said in a statement that the agency is “committed to protecting public health and the environment and advancing the agency’s goals to protect America’s waters.”

The agency said it would propose a rule to collect information from the factory farms and would take final action on the proposed rule within two years. It will seek public comment as part of that process.