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Where Are We Now, Following Maui County, Sackett, and the Latest EPA Guidance?

April 9, 2024 Articles
American Bar Association

The last few years have seen significant developments in our understanding of the reach of the federal Clean Water Act (CWA). (Indeed, “reach” here can be interpreted literally and figuratively.) The two issues plaguing the regulated industry, courts, regulators, and practitioners relate to what type of release constitutes a discharge within the meaning of the CWA, and what kind of waters the CWA protects from unpermitted discharges. Here, we attempt to summarize the recent developments as courts and regulators seek to answer these questions and provide guidance to the regulated industry.

The CWA prohibits discharging pollutants into “navigable waters” without a permit. See 33 U.S.C. §§ 1311, 1344. It defines a “discharge of a pollutant” as “any addition of any pollutant to navigable waters from any point source,” while a point source means “any discernible, confined and discrete conveyance . . . from which pollutants are or may be discharged.” 33 USC § 1362(12) and (14). “[N]avigable waters,” in turn, are defined as “the waters of the United States” or WOTUS as they are commonly referred to. 33 U.S.C. § 1362(7). Thus, the scope of the CWA is dictated both by what qualifies as a discharge and by what constitutes a WOTUS.

The U.S. Environmental Protection Agency (EPA) and the Army Corps of Engineers jointly enforce the CWA and are tasked with interpreting these terms. (In addition to the EPA and the Corps, many states have been authorized to enforce the CWA, and are quite active in doing so, including by issuing administrative orders and pursuing judicial action against parties in violation of the CWA. The CWA also authorizes citizen suits in various circumstances. See 33 U.S.C. § 1365.) Shifting EPA and Corps interpretations have added uncertainty to the scope of CWA enforcement. And the seemingly contradictory approaches the U.S. Supreme Court has taken in interpreting the CWA and a constant stream of litigation have exacerbated that uncertainty. All this has left industry and other stakeholders to navigate turbulent regulatory waters without a compass.

Maui County: Supreme Court Tackles Indirect Discharges to WOTUS

In 2020, the U.S. Supreme Court issued its ruling in a string of landmark rulings seeking to clarify the reach of the CWA. In County of Maui, Hawaii v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020), the Court sought to clarify what types of discharges to “waters of the United States” were actionable under the CWA.

The case concerned a Maui County wastewater reclamation facility that pumped treated wastewater effluent into groundwater, which effluent traveled through groundwater and reached the Pacific Ocean. Environmental groups filed suit in 2012, arguing that these discharges—despite being to groundwater—violated the CWA because they effectively constituted discharges of a pollutant from a point source (the wastewater facility) to waters of the United States (which include “territorial seas” such as the ocean waters around Hawaii) without a National Pollutant Discharge Elimination System (NPDES) permit.

In its 2020 ruling, the Supreme Court held that the CWA requires a permit when there is a direct discharge from a point source into waters of the United States, or “when there is the functional equivalent of a direct discharge.” The Court did not define “functional equivalent” here, noting instead that the evaluation would depend on the similarity of a particular discharge to a direct discharge, and otherwise listing seven factors that might be relevant to the analysis, including transit time, distance traveled, and nature of the material through which the pollutant traveled. The Maui County holding is widely considered to have expanded the reach of the CWA, increasing the number of facilities that may be required to seek NPDES permit coverage, and creating potential CWA citizen-suit liability for operations that result in accidental releases to soil (and eventually, to groundwater).

Sackett: The Supreme Court Tackles “Waters of the United States”

In 2023, the Court again tackled the CWA. The Court’s holding in Sackett v. EPA addressed the geographic reach of the CWA by defining (or redefining) “waters of the United States.” 598 U.S. 651, 671 (2023).

The definition of WOTUS has been the subject of repeated federal rule makings over the last decade, with each administration offering its own interpretation of the term. This included a January 2023 rulemaking by the Biden administration that interpreted WOTUS to include wetlands with a significant nexus to navigable waters. See 88 Fed. Reg. 3004 (2023). The rule sought to regulate upstream waters that “significantly affect the integrity of . . . traditional navigable waters, the territorial seas, and interstate waters.” Like the test in Maui County, this proposed interpretation recognized the impact that discharges into hydrologically connected waters can have on navigable waters.

The Supreme Court’s holding in Sackett significantly narrowed the definition of WOTUS compared to the EPA’s and the Corps’ January 2023 rulemaking. Based on the dictionary definition of waters, the Supreme Court defined WOTUS as only including “relatively permanent, standing or continuously flowing bodies of water ‘forming geographic[al] features’ that are described in ordinary parlance as ‘streams, oceans, rivers, and lakes.’” 598 U.S. 651, 671 (2023). The Court further held that the CWA only covers wetlands that are “indistinguishably part of a body of water that itself constitutes” waters of the United States. Id.at 676. More specifically, the CWA only applies to wetlands that are adjacent to waters of the United States and that have “a continuous surface connection with that water, making it difficult to determine where the ‘water’ ends and the ‘wetland’ begins.” Id.at 678–79.

In contrast to Court’s decision in Maui County, which arguably expanded the CWA to cover discharges to waters hydrologically connected to WOTUS, the Court’s ’decision in Sackett significantly curtailed the reach of the CWA by narrowly defining WOTUS. These mixed messages have left the agencies and regulated community with an unclear path forward.

After Sackett: EPA Responds with Updated WOTUS Rule

On August 29, 2023, the EPA and the Corps released amendments to their January 2023 rulemaking to conform the definition of “waters of the United States” to the Supreme Court’s Sackett decision. The agencies revised the definition to: (1) remove the significant-nexus standard, (2) amend its definition of “adjacent” to mean a “continuous surface connection,” and (3) remove “interstate wetlands.”

Despite incorporating the test from Sackett, the 2023 WOTUS rule leaves open questions about the scope of CWA jurisdiction. Notably, the agencies cited Sackett’s “relatively permanent” requirement for WOTUS but did not provide clarity on how that language impacted their jurisdiction over ephemeral and intermittent streams, which the agencies wrote in January 2023 were not categorically included or excluded from CWA jurisdiction.

The 2023 WOTUS rule became effective on September 8, 2023, but 27 states have continued to challenge the rule in ongoing litigation. In those states, the 2023 WOTUS rule has been stayed, and the EPA and the Corps are interpreting “waters of the United States” consistent with the prior regulatory regime (pre-2015) and the Sackett decision. The EPA’s website includes a map identifying the states where the 2023 WOTUS rule and the prior regulatory rule apply.

After Maui County: EPA Responds with Draft Guidance on “Functional Equivalency”

Shortly after the EPA issued its updated WOTUS rulemaking, on November 20, 2023, the EPA issued draft guidance expanding on the Supreme Court’s Maui County holding that CWA NPDES permits are required for discharges that are the “functional equivalent” of a direct discharge to navigable waters. More specifically, the EPA’s draft guidance applies to “discharges from point sources that reach [WOTUS] via groundwater or other subsurface flow,” and identifies considerations for “determining which discharges through groundwater may require coverage under an NPDES permit, and the types of information that may be useful” to regulators in developing permit conditions. The EPA’s guidance is designed to help facilities that discharge to groundwater “evaluate whether such discharges are the functional equivalent” of a direct discharge such that a permit should be sought.

The EPA’s guidance begins by restating the seven factors identified by the Supreme Court in the Maui County holding: “(1) transit time; (2) distance traveled; (3) the nature of the material through which the pollutant travels; (4) the extent to which the pollutant is diluted or chemically changed as it travels; (5) the amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source; (6) the manner by or area in which the pollutant enters the navigable waters; and (7) the degree to which the pollution (at that point) has maintained its specific identity.” Maui County, 140 S. Ct at 1476–77.

From there, the guidance identifies key analyses that facility operators should undertake to determine if they should seek a permit, including (1) confirming connectivity—i.e., determining if any discharges to groundwater reach WOTUS; and (2) analyzing functional equivalency based on (a) the Maui County factors and site-specific features, with a focus on transit time and distance traveled, and (b) other potentially relevant factors, including those identified in the guidance. (Here, it is not necessarily obvious how the EPA’s guidance offers much direction to the regulated community about how to conduct the functional-equivalence analysis.)

The EPA concludes with recommendations for applying for an NPDES permit, given that the permit-application forms do not currently offer specific fields for discharges via groundwater, as well as a discussion of factors that are not relevant to the functional-equivalency analysis, including intent and information on state groundwater-protection programs. The public-comment period for the draft guidance closed on December 27, 2023. It remains to be seen whether the EPA will update this guidance with clearer direction on how to analyze the various factors relevant to the functional equivalency analysis so as to provide operators with clarity.

Conclusion

Rather than clarifying the scope of the CWA, the Supreme Court’s recent decisions in Maui County and Sackett have created further uncertainty. That is, Maui County confirms that the CWA regulates discharges that are hydrologically connected to a WOTUS, while Sackett rejects hydrological connectivity as a sufficient basis to determine which waters qualify as a WOTUS. These seemingly contradictory philosophical differences have failed to bring clarity to the regulated community.

There is little hope for additional clarity anytime soon. In fact, CWA enforcement and jurisdiction is likely to soon become even more complicated, as the Supreme Court appears poised to overturn the decades-old doctrine that courts should defer to an agency’s reasonable statutory interpretation, known as Chevron deference, in two cases pending before the Court—Loper Bright Enterprises v. Raimondo, No. 22-451 (U.S. 2023) and Relentless, Inc. v. Department of Commerce, No. 22-1219 (U.S. 2023). Eliminating the Chevron deference doctrine, combined with the ongoing litigation regarding the status of the EPA’s and the Corps’ CWA rulemakings, will only further exacerbate the uncertainty faced by the regulated community, and further complicate the current state-by-state patchwork of CWA permitting requirements, regulations, and enforcement, the result of which is that discharges in one state may require an NPDES permit, while the exact same discharges in another state may be exempt from CWA permitting requirements.

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