A Wyoming man threatened with $16 million in fines over the building of a stock pond reached a settlement with the Environment Protection Agency, allowing him to keep the pond without a federal permit or hefty fine.

Andy Johnson, of Fort Bridger, Wyoming obtained a state permit before building the stock pond in 2012 on his sprawling nine-acre farm for a small herd of livestock.

Not long after contruction, the EPA threatened Johnson with civil and criminal penalties – including the threat of a $37,500-a-day fine -- claiming he needed the agency's permission before building the 40-by-300 foot pond, which is filled by a natural stream.

"It was very threatening," Johnson, a professional welder and married father of four, said of the EPA's compliance order against him.

"I was shocked and devastated and I didn’t know what to do," Johnson told FoxNews.com Tuesday. "I’m sitting there thinking, 'I’m the only provider for my whole family. How can I fight this?'"

On Monday, lawyers representing Johnson announced that the federal government agreed to resolve the case and a federal court has approved.

Under the settlement, Johnson's pond will remain and he won't pay any fines or concede any federal jurisdiction to regulate the pond. And the government won't pursue any further enforcement actions based on the pond's construction.

The only conditions, according to Johnson's lawyers, are that willow trees be planted around the pond and a partial fence installed to "control livestock."

"This is a victory for common sense and the environment, and it brings an end to all the uncertainty and fear that the Johnson family faced,” said Jonathan Wood, a staff attorney with Pacific Legal Foundation who represented Andy Johnson in his court challenge to the EPA, and in negotiating the settlement.

"The EPA never identified any environmental problems with the pond," Wood told FoxNews.com. "In fact, it's been a boom for the environment."

An EPA spokesman was not immediately available for comment when contacted Tuesday. The government had said Johnson violated the Clean Water Act by building a dam on a creek without a permit from the Army Corps of Engineers and claimed material from his pond was being discharged into other waterways.

As the EPA was demanding the pond be ripped out, Ray Kagel, a former federal regulator, claimed it was a benefit to the environment by creating wetlands, habitat for fish and wildlife -- and cleaned the water that passes through it.

Wood said Tuesday that the EPA has a "broad interpretation" of the Clean Water Act and noted that federal law clearly exempts stock ponds from the rules of the agency.

Under Supreme Court precedent, the federal government can regulate waters only if they have a "significant nexus" to navigable waters. Johnson's pond drains to a manmade irrigation ditch, where the water is used for agriculture, according to the Pacific Legal Foundation.

"The only thing he has to do is plant willows around the pond and put in a partial fence to control livestock," Wood said. "The irony of this case is the government has insisted all along this isn’t a stock pond."

Over the last four years, the pond has served as a safe and easily accessible water supply for his angus steers and horses. It's also become a natural home for various fish -- including brook and brown trout -- and a regular stop for water fowl and moose.

Johnson said he hopes his legal case will give hope to others who might face similar battles in the future.

“This is a huge victory for us as well as private property owners across the country,” Johnson said.

“The next family that finds itself in our situation, facing ominous threats from EPA, can take heart in knowing that many of these threats will not come to pass," he said. "If, like us, you stand up to the overreaching bureaucrats, they may very well back down."