Major Supreme Court Ruling Expands Reach of Clean Water Act NPDES Permitting to Certain Discharges to Groundwater

April 23, 2020 Articles

In a landmark ruling, the United States Supreme Court has held that, under section 301 of the federal Clean Water Act (CWA), a discharge of pollutants from a point source to groundwater is subject to regulation under the CWA, if the discharge is the “functional equivalent” of a discharge to navigable waters. This ruling has the potential to both (1) expand the range of facilities that are considered CWA point sources and are therefore required to obtain a National Pollutant Discharge Elimination System (NPDES) permit, and (2) increase the risk of citizen suit litigation alleging that facilities discharging to groundwater have failed to comply with the CWA.

The County of Maui Decision: Background and Court’s Analysis

The 6-3 Supreme Court opinion in County of Maui, Hawaii v. Hawaii Wildlife Fund et al., No. 18-260 (U.S. Apr. 23, 2020) was authored by Justice Breyer and joined by Chief Justice Roberts and Justices Ginsburg, Sotomayor, Kagan, and Kavanaugh. The case concerns a wastewater reclamation facility operated by Maui County, which pumps approximately 4 million gallons of treated wastewater effluent per day into groundwater at a depth of hundreds of feet underground. The effluent travels through groundwater to the Pacific Ocean. In 2012, environmental groups filed a citizen suit under the CWA, arguing that the county was discharging a pollutant from a point source (the wastewater facility) to navigable waters (the ocean) without an NPDES permit authorizing the discharge. Both the federal district court and the Ninth Circuit Court of Appeals agreed with the citizen enforcers and ruled against the county, and the Supreme Court granted review. (See Slip Op. at pp.3-4.)

The Court begins its analysis by stating that the question at issue concerns the word “from”:  “Is pollution that reaches navigable waters only through groundwater pollution that is ‘from’ a point source, as the statute uses the word?” (Slip Op. at p.4.) The Ninth Circuit essentially answered “yes,” holding that the CWA requires an NPDES permit where the pollutant is “fairly traceable” to a point source, even it if traveled through groundwater before entering navigable waters. (Id.) The county and several amicus curiae—including the Solicitor General—argued the opposite: that the CWA requires a point source to be “the means of delivering pollutants to navigable waters” for the CWA to apply and require an NPDES permit. (Id. (emphasis in original).)

The Court rejected these alternative bright-line approaches, holding that a case-by-case analysis is required.  The Court recognized that because “[v]irtually all water, polluted or not, eventually makes its way to navigable water” (Slip Op. at p.5), the Ninth Circuit’s “fairly traceable” standard would subject too broad a range of point sources to NPDES permitting requirements, in contravention of Congress’s intent and the statute’s structure. On the other hand, Maui and the Solicitor General’s interpretation—that an NPDES permit is not required if the pollutant travels through “any amount of groundwater between the end of the pipe and the edge of the navigable water”—is “too narrow, for it would risk serious interference with EPA’s ability to regulate ordinary point source discharges.” (Id. at p.10 (emphasis in original).) For example, it would create an incentive for a discharger to relocate a discharge point so that the pollutant is required to travel though “perhaps only a few yards” of groundwater before reaching a navigable water. (Id.) This would create “a large and obvious loophole in one of the key regulatory innovations of the Clean Water Act.” (Id.)

The Court’s New Rule:  The “Functional Equivalent” of a Direct Discharge Requires an NPDES Permit

Having rejected these “extreme” positions, the Court set forth a “middle ground” rule aimed at facilitating federal regulation under the CWA “without undermining the States’ longstanding regulatory authority over land and groundwater”:

We hold that the statute requires a permit when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge.

(Slip Op. at p.15 (emphasis in original).)  The Court noted that, in evaluating functional equivalence, the statutory language “imposes natural limits as to when a point source can properly be considered the origin of pollution that travels through groundwater,” and the evaluation “depends upon how similar to (or different from) the particular discharge is to a direct discharge.” (Id. at p.16.) The Court declined to provide more specificity regarding this evaluation, asserting “there are too many potentially relevant factors applicable to factually different cases,” which could be addressed in future district and circuit court decisions and EPA and state administrative guidance. (Id.) However, it did list “some” of the factors that “may prove relevant”:

  1. transit time;
  2. distance traveled;
  3. nature of the material through which the pollutant travels;
  4. extent to which the pollutant is diluted or chemically changed as it travels;
  5. amount of pollutant entering navigable waters relative to amount that leaves the point source;
  6. manner by or area in which the pollutant enters the navigable waters; and
  7. degree to which the pollutant has maintained its specific identity at that point of entry.

(Id.)  Importantly, the Court stated:  “Time and distance will be the most important factors in most cases, but not necessarily every case.”  (Id.)  Finally, it cautioned that “[d]ecisions should not create serious risks either of undermining state regulation of groundwater or of creating loopholes that undermine the statute’s basic federal regulatory objectives.”  (Id. at p.18.)

The Court vacated the Ninth Circuit judgment and remanded the case, so that the Ninth Circuit could apply the newly announced rule.

Today’s Ruling Will Have Serious Impacts on the Regulated Community, Particularly Industrial Facilities and Legacy Contaminated Sites

As the Court recognized, future judicial decisions (including the Ninth Circuit decision on remand in this case) and federal/state administrative guidance will be needed to determine the extent to which the Court’s new rule is a “game-changer,” in terms of how many dischargers to groundwater—including currently operating industrial facilities and owners/operators of sites with legacy environmental contamination—will be brought into the NPDES permitting regime.  Today’s ruling may also raise the stakes for companies dealing with accidental releases to groundwater (at issue in the similar case of Kinder Morgan Energy Partners LP v. Upstate Forever, No. 18-268 (U.S.), petition for cert. filed).  As with other aspects of CWA regulation (such as section 404 dredge-and-fill permitting) and similar federal environmental regulation, we anticipate a great deal of variation, with some implementing states and federal courts interpreting County of Maui broadly, but others taking a much narrower view, until such time as the Supreme Court revisits the issue at some future (likely, much later) date.  Dischargers will need to track the judicial decisions and administrative guidance applicable to all jurisdictions in which they operate and are potentially affected, to ensure they remain in compliance. 

Moreover, and particularly until such time as adequate guidance from the courts and regulators becomes available, we foresee an increase in citizen suit litigation initiated by private parties and environmental groups challenging a discharger’s compliance with NPDES permitting requirements.  Citing County of Maui, such litigation could claim that a facility’s discharges to groundwater trigger the requirement for NPDES permitting, even if regulators have not yet taken such a position.  If successful, such suits could result in courts assessing penalties (payable to the federal government) and/or payment of the citizen enforcer’s attorney’s fees in prosecuting the suit.  If a discharger receives a notice letter from a citizen enforcer, indicating that such a lawsuit may be filed, it should immediately seek legal advice.

Finally, in light of the evolving regulatory and legal framework and related risks, dischargers  should consider undertaking a proactive assessment of their exposure to a claim—by either a regulator or citizen enforcer—that their facilities or operations require an NPDES permit.  If the exposure is determined to be significant, options to mitigate regulatory and liability risks can be considered, such as preemptive submittal of an NPDES permit application, or a request to the relevant implementing authority for a determination as to whether such a permit is required.

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