Justices Find that the Clean Water Act Applies to Pollutants Passing Through Groundwater
On April 23, 2020, the U.S. Supreme Court (“Supreme Court”) decided County of Maui, Hawaii v. Hawaii Wildlife Fund et al.,1 holding in a 6-3 opinion that a discharge permit is required under the Federal Water Pollution Control Act (“Clean Water Act” or “Act”) when there is a direct discharge of pollutants from a point source into navigable waters or when there is the functional equivalent of a direct discharge.2 Justice Stephen Breyer, writing for the court, outlined a new “middle-ground” and highly fact-specific test to be applied in determining whether pollutants discharged from a point source and passing through groundwater before entering into navigable waters constitutes the functional equivalent of a direct discharge. The new test outlined by the Supreme Court provides no bright-line demarcation that readily identifies a particular set of facts as requiring a permit. Rather, the Supreme Court identifies a non-exhaustive list of factors to be considered, of which “time” and “distance” are considered to be the most important in “most cases.”
While many had hoped for more clarity, the Supreme Court’s decision may, as a practical matter, leave substantial uncertainty regarding whether a discharge permit will be required under the Clean Water Act in certain circumstances and place significant burdens on potentially regulated parties to evaluate whether their particular set of facts constitutes the “functional equivalent” of a discharge to navigable waters. This uncertainty may increase the risk of enforcement by the U.S. Environmental Protection Agency (“EPA”) or analogous state agency. Environmental groups can be expected to use citizen suit challenges for failure to obtain a permit to argue for the broadest possible interpretation of “functional equivalent.” And in the worst case, lower courts may really be left with as little to go on in applying the Supreme Court’s holding as Justice Samuel Alito suggests in dissent: ”[t]hat’s [the lower courts’] problem. Muddle through as best you can.”3
That said, the Supreme Court clearly reined in the overbroad “fairly traceable” test articulated by the U.S. Court of Appeals for the Ninth Circuit (“9th Circuit”), an important aspect of the case that demonstrates the Supreme Court’s concern with avoiding an interpretation of the Clean Water Act that would undermine the States’ principal authority to regulate groundwater.
Clean Water Act Requires Permitting for Point Source Discharges of Pollutants into Navigable Waters
The stated purpose of the Clean Water Act is to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.4 To achieve this goal, the Clean Water Act establishes the National Pollutant Discharge Elimination System (“NPDES”),5 a program requiring any person seeking to discharge any pollutant from a point source into navigable waters to first obtain a permit authorizing the discharge of such pollutant.
The NPDES permitting program is reliant on a set of specific terms defined under the Clean Water Act to implement this program, including “pollutant,”6 “point source,”7 and “discharge of a pollutant.”8 The focal point under this program is the protection of “navigable waters,” which is defined under the Act to mean waters of the United States, including oceans, rivers and lakes.9 Broadly stated, this program compels (with certain exceptions) a person discharging any pollutant from a point source into navigable waters to first obtain a discharge permit from the EPA or an analogous state agency delegated NPDES authority by the EPA.10
Facts under Maui and the Lower Court Decisions
The facts in Maui are fairly straightforward. The County of Maui (“County”) operates a wastewater treatment facility on the island of Maui, Hawaii. The facility collects approximately 4 million gallons per day of sewage from the surrounding area, filters and disinfects the sewage and pumps it into four on-site underground injection wells, which wells are subject to Underground Injection Control (“UIC”) Permits issued to the County under authority of the federal Safe Drinking Water Act (“SDWA”)11 and are located approximately one-half mile from the Pacific Ocean.12
In 2012, Hawaii Wildlife Fund and three other environmental groups that comprise the respondents in the Supreme Court decision at issue (“Respondents”) brought a Clean Water Act lawsuit against the County, alleging that the County’s introduction of effluent into its wells constituted a discharge of pollutants into navigable waters (i.e., the Pacific Ocean) requiring an NPDES permit, and the County’s failure to obtain such permit was a violation of the Act.13 A tracer dye study was conducted on migration of the effluent from the four wells and, as a result, the County conceded that the effluent discharge into at least two of the four wells at the treatment facility was migrating into the Pacific Ocean.14 Moreover, the County conceded in the District Court case that the SDWA injection wells are “point sources.” The District Court granted the environmental groups’ summary judgment motion, ruling that the County was liable under the Clean Water Act for discharging effluent from a point source through groundwater and into the Pacific Ocean without a discharge permit.15
The County appealed the District Court’s decision to the 9th Circuit, asserting that the District Court could not impose permitting liability under the Clean Water Act by focusing exclusively on the original point source in determining whether a pollutant discharge into navigable water required a permit; rather, the County contended that how pollutants travel from the original point source to navigable waters matters.16 More specifically, the County argued that passage of the effluent through groundwater interrupted the direct discharge of the pollutants into the Pacific Ocean, thereby avoiding the requirement for a discharge permit under the Act.17
The 9th Circuit did not accept the County’s premise. Instead, the 9th Circuit held the County liable for failure to obtain an NPDES permit because the County discharged pollutants from a point source, the pollutants were fairly traceable from the point source to a navigable water such that the discharge is a functional equivalent of a discharge into the navigable water, and pollutant levels reaching navigable waters were more than de minimis.18 The 9th Circuit emphasized the second criterion as being the most critical; that is, the pollutants should be “fairly traceable” from point source to navigable water.19 Here, it was evident to the 9th Circuit that the results of the tracer dye study coupled with the County’s concession that the effluent was discharging from a point source and entering into the Pacific Ocean was a sufficient basis for a finding that the County required a discharge permit under the Act.
The Supreme Court’s Review of Maui
The issue presented to the Supreme Court is fairly straightforward: whether effluent discharged from a point source and passing through groundwater before migrating into the Pacific Ocean constituted a “discharge of a pollutant,” and thus was subject to the Clean Water Act’s NPDES permitting program. The twist confronting the Supreme Court was reconciling the “discharge of a pollutant” — that is, addition of a pollutant from a point source into navigable waters — with facts clearly indicating that the pollutants travelled through groundwater before passing into the navigable waters.
- The Supreme Court’s Consideration — and Eventual Rejection — of Tests Proposed by the Respondents, the County and the Federal Government.
Initially, the Supreme Court evaluated the positions of the Respondents and the County, as well as the Solicitor General, as amicus curiae on behalf of the federal government, on how to resolve the issue surrounding the passage of pollutants through groundwater. The Solicitor General’s position was substantially the same as the one advanced by the County. As described below, each of these approaches were rejected by the Supreme Court.
In evaluating the Respondent’s position, which adopted the 9th Circuit’s “fairly traceable” test coupled with a “proximate cause” element (that is, the discharge from a point source must “proximately cause” the pollutants’ addition to navigable waters) — an implicit concession that “fairly traceable” requires some limiting principle to be consistent with the Clean Water Act — the Supreme Court initially dismissed inclusion of the proximate cause element in the test, as it found no basis for importing a legal concept from the law of torts into the Clean Water Act.20 More importantly, the Supreme Court did not see how addition of this legal concept would significantly narrow the fairly traceable test.21
The Supreme Court determined that the “fairly traceable” test would provide the EPA with overly broad powers by narrowly focusing on whether a pollutant discharged into navigable waters could be simply traced back to a point source. The Supreme Court’s primary concern was that exclusive focus on the ability to trace back a pollutant’s source, no matter the circumstances, would control in determining whether an NPDES permit was required.22 Further, the “fairly traceable” test would intrude too gravely upon the rights of States as they relate to groundwater pollution and non-point source pollution, subject areas the Supreme Court acknowledged Congress had intended to leave substantial responsibility and autonomy to the States.23 Additionally, the Supreme Court determined that the fairly traceable test would undermine a longstanding regulatory practice administered by EPA under which the agency had found limitations on imposing a permit obligation.24
The County and the Solicitor General encountered no better outcome on their position — a bright-line test that the Clean Water Act’s NPDES permitting requirement is inapplicable if the discharge from the relevant point source was made to groundwater before entering into navigable waters. The Supreme Court was concerned about a large and obvious loophole where dischargers could avoid permitting simply by moving the discharge point a few feet in order to enter groundwater before reaching navigable waters.25 In discarding this approach, the Supreme Court rejected the County’s contention that the statutory meaning of “from any point source” is not about where the pollution originated, but about how it got there.26
B. The Justices Middle-Ground Test for Determining When an NPDES Permit is Required.
Unsatisfied with the choices presented by the Respondents, the County and the Solicitor General, the Supreme Court attempted to find middle ground between the tests posed by the Respondents and the County. The Supreme Court’s solution is to clarify that discharges of pollutants from point sources into navigable waters already addressed under the Act includes those discharges that are the “functional equivalent of a direct discharge.”27
This, of course, raises the question, stated by Justice Alito in his dissent: “[j]ust what is the ‘functional equivalent’ of a ‘direct discharge’”?28
C. “Functional Equivalency” is Not a Bright-Line Test But Requires a Weighing of Factors to Determine its Applicability.
It remains unchanged that the addition of a pollutant discharged from a point source directly into navigable waters requires NPDES permitting. Nothing new there. But in deciding Maui, the Supreme Court has now clarified that those discharges include a discharge found to be the “functional equivalent of a direct discharge.”
What is functional equivalency and how might it apply? The Supreme Court rejects a bright-line rule:29
We think this phrase best captures, in broad terms, those circumstances in which Congress intended to require a federal permit. That is, an addition [of a pollutant] falls within the statutory requirement that it be ‘from any point source’ when a point source directly deposits pollutants into navigable waters, or when the discharge reaches the same result through roughly similar means.30
The Supreme Court acknowledges the downside to its newly developed test — there is no bright-line demarcation of when it applies.
The Supreme Court’s reluctance in developing a more specific test lies in the existence of “too many potentially relevant factors applicable to factually different cases.” In other words, there are simply too many variables based on the facts at issue in any particular case that could affect a final determination on permitting. Consequently, the Supreme Court goes on to list seven potentially relevant factors that could be considered (depending on the circumstances of a particular case) in application of the new test:
- transit time;
- distance traveled;
- the nature of the material through which the pollutant travels;
- the extent to which the pollutant is diluted or chemically changed as it travels,
- the amount of pollutant entering the navigable waters;
- the manner by or area in which the pollutant enters the navigable waters; and
- the degree to which the pollution (at that point) has maintained its specific identity.31
Of these factors, the Supreme Court identified “time” and “distance” as the most important. The Supreme Court outlined the extremes for imposing permitting obligations under the Clean Water Act on the basis of time and distance, noting that the passage of pollutants through a “few feet” of groundwater (or over a beach) to reach navigable waters was sufficient for imposing permitting requirements, while passage of the pollutants through 50 miles of groundwater and requiring “many years” to be released into navigable waters “likely” would not be subject to permitting.
Time and distance may not, however, always be the most important factors in every given case. As stated by the Supreme Court, time and distance are important “in most cases, but not necessarily every case.”32 Moreover, this aggregate list of seven factors is not an exclusive list; rather, the Supreme Court identified these seven as “just some of the factors” that may prove relevant in a particular case.33 Consequently, other factors beyond the seven listed may be of critical importance, depending on the circumstances in a case.
The down sides of such a multifactor test are at least two-fold: First, it makes much more complex the analysis that must be undertaken for any particular discharge site because more data and more factors must be assessed. Second, with many factors being relevant (even if two are thought to predominate), it is difficult to have confidence that consistency in result will occur between various potential permitting candidates. As Justice Alito pointedly, but perhaps fairly, notes in criticizing the new standard: “[i]f the Court is going to devise its own legal rules, instead of interpreting those enacted by Congress, it might at least adopt rules that can be applied with a modicum of consistency.”34
Application of the Functional Equivalent Test
Enforcement of the Clean Water Act may arise from proceedings undertaken by governmental agencies with jurisdiction, such as the EPA and analogous state agencies. In the absence of governmental civil actions or criminal proceedings, civil proceedings, known as “citizen suits,” may be pursued by private citizens.35 The Clean Water Act expressly authorizes a private citizen to commence a civil action on his own behalf “against any person . . . who is alleged to be in violation of . . . an effluent standard or limitation under this chapter . . . .”36 An “effluent standard or limitation” is defined under the Clean Water Act to include the discharge of a pollutant in violation of law.37
The risk of enforcement, including possible monetary sanctions, for failure to obtain an NPDES permit under the Clean Water Act is a very real possibility for regulated parties with discharges that pass through groundwater and ultimately are released into navigable waters. As noted by Justice Alito in his dissent, the Act authorizes as much as $54,833 in fines per day (or more than $20 million per year) and contains a 5-year statute of limitations.38 And he does not discount the added risk arising from the threat of citizen suits: “[e]ven when the EPA and the relevant state agency conclude that a permit is not needed, there is always the possibility that a citizen suit will result in a very costly judgment.”39
So, what is the regulated community to do? How does it interpret Maui when the risk of being wrong may result in enforcement and severe penalties — possibly even years after the discharge occurred?
As an initial step, a potentially regulated party should evaluate whether its discharge of pollutants40 occurs from a point source. This examination may not exclude very many parties from regulation, as the definition of point sources is broad.41 An interesting aspect of the Maui decision is that the Supreme Court did not analyze whether a point source was present because the County had conceded in the District Court that its injection wells were a point source.42
While “wells” are clearly included in the definition of point source,43 it is unclear whether injection wells permitted by the EPA or state authorities under one permitting scheme — in the case at issue, the UIC program under the SDWA (a law focusing on the potential release of pollutants into surface waters and groundwater with regards to the protection of drinking water) — may be precluded from classification as a “point source” under the NPDES program in the Act, a wholly separate permitting scheme. The decision in the District Court states that the County and the EPA entered into a consent decree regarding the injection wells and compliance with the SDWA, but the consent decree did not address (and thus undoubtedly did not compel) the County to obtain an NPDES permit under the Clean Water Act.44 It might be argued that the EPA considered what obligations the County had under the Clean Water Act, as it required the County to obtain a water quality certification under Section 401 of the Act from the State of Hawaii. In any event, it may prove beneficial to first assess the existence of a point source, including whether the permitting of a facility under a permitting scheme separate and apart from the Clean Water Act’s NPDES program may obviate classification of that facility as a point source.
Assuming there is a discharge of pollutants from a point source, a potentially regulated party should further evaluate the existence of navigable waters in the vicinity of the point source and potential migration pathways connecting the two. The scope and extent of any such evaluation will be dependent upon the facts at issue. For future discharges, this may require a potentially regulated party to incorporate additional measures in its NPDES permit decision-making process.
In performing this analysis, a potentially regulated party should focus on the seven factors identified by the Supreme Court in Maui, with emphasis placed on the applicability of time and distance. While the facts of every case are different, evaluation of those seven factors is critical, as it may confirm that a functional equivalent direct discharge is unlikely to occur based on application and weighing of the enumerated factors. The relative impacts of time and distance as they may apply are especially important; the results of the analysis may serve to reasonably confirm that the timing or distance for passage of pollutants to navigable waters are such that permitting is unlikely to be required. Other factors, beyond what the Supreme Court has identified, should be evaluated if a potentially regulated party reasonably believes such other factors are critical in the movement of pollutants that it discharges. In light of the potential for government or private party lawsuits challenging a determination that a permit is not required, potentially regulated parties could consider documenting this decision in a manner that will optimize their position in any future litigation.
Finally, as the Supreme Court suggests, at some point there will likely be additional direction provided on functional equivalent discharges in the form of agency guidance or court decisions. The Supreme Court notes in Maui that further direction on how to implement its new test may be provided through EPA administrative guidance as well as by the courts through individual decisions.45 EPA guidance may be supplied in the form of grants of individual permits, promulgation of general permits or the development of general rules. The majority opinion states its expectation that future court cases will render decisions that provide examples on implementation of the test that in turn can lead to more refined principles.46
Additional guidance on functional equivalent discharges as it relates to the Maui decision will take some time to develop; perhaps years. This issue should be monitored closely. If the regulated community’s experience after the Supreme Court’s earlier decision in Rapanos v. United States47 is any guide, there is a risk that such guidance will focus on attempting to maximize agency jurisdiction rather than evenhandedly applying the Supreme Court’s new test.
Going forward, any potentially regulated party will be well-served to evaluate its discharges from point sources to groundwater and potentially further into navigable waters in connection with its NPDES permit decision-making process. With Maui having clarified and highlighted the potential for future enforcement risk associated with these discharges, a party’s failure to compare its own discharges to the functional equivalency of a direct discharge means that party is likely proceeding at risk.
1 Cty. of Maui v. Haw. Wildlife Fund, No. 18-260, slip op. (U.S. April 23, 2020).
2 Id. at 15.
3 No. 18-260 (U.S. April 23, 2020) (Alito, J., dissenting) [“Dissent Op.”] at 2.
4 33 U.S.C. § 1251(a).
5 Id. § 1342(a).
6 The term “pollutant” is broadly defined and includes “dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage sludge, munitions, chemical wastes, biological materials, radioactive materials, heat, wrecked or discarded equipment, rock, sand, cellar dirt and industrial, municipal, and agricultural waste discharged into water.” 33 U.S.C. § 1362(6).
7 The term “point source” means any discernible, confined and discrete conveyance, including . . . any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged. 33 U.S.C. § 1362(14).
8 The term “discharge of a pollutant” means any addition of any pollutant to navigable waters from any point source. 33 U.S.C. § 1362(12).
9 33 U.S.C. § 1362(7).
10 Id. § 1311.
11 42 U.S.C. § 300f et seq.
12 Haw. Wildlife Fund v. Cty. of Maui, 24 F. Supp. 3d 980, 983 (D.Haw. 2014).
15 Id. at 1005.
16 Haw. Wildlife Fund v. Cty. of Maui, 886 F.3d 737, 745 (9th Cir. 2018) (emphasis added).
18 Id. at 749.
20 Slip op. at 5-6.
21 Id. at 6.
22 Id. at 6. Examples cited by the Supreme Court included pollutants carried to navigable waters on the wings of a bird’s feathers or the 100-year migration of pollutants through 250 miles of groundwater to a river. The Respondents attempted to address this concern by adding the “proximate cause” requirement, in expectation that the legal concept would curb the EPA’s powers under the test.
24 Id. at 8-9. The Supreme Court cited several case histories exemplifying the EPA’s refusal to impose permitting requirements for such reasons as the absence of a physically and temporally direct hydrologic connection to surface water or because discharges reached groundwater only after “lengthy” periods (ranging from “literally dozens, and perhaps hundreds, of years” to “between 60 and 420 years”).
25 Id. at 10. The Supreme Court believed that if the County and the Solicitor General’s position was adopted as the correct test, then a discharger of pollutants through an owned pipe could easily frustrate permitting requirements under the Act by simply moving the pipe back, perhaps only a few yards, so that the pollution must travel through at least some groundwater before reaching navigable waters. Id. Using similar reasoning, the Supreme Court rejects the position in Justice Alito’s dissent. Justice Alito, advocated a reading of the regulatory definitions that would suggest only two possible outcomes for the case at issue:
[a] pollutant that reaches the ocean could be understood to have been added ”from” a pipe if the pipe originally discharged the pollutant and the pollutant eventually made its way to the ocean by flowing over or under the surface of the ground. Or a pollutant that reaches the ocean could be understood to have come “from” a pipe if the pollutant is discharged from the pipe directly into the ocean.
Dissent Op. at 1. Justice Alito concluded that of the two outcomes, the latter approach is more appropriate, as he believes it to be consistent with the statutory language and better fits the overall scheme of the Clean Water Act. Id. at 8. The Supreme Court rejected this latter outcome, finding it inconsistent with the statutory text and characterized Justice Alito’s approach as simultaneously creating a “massive loophole” in the permitting scheme that Congress established. Id. at 14-15.
26 Slip op. at 11.
27 Id. at 15.
28 Dissent Op. at 2.
29 Justice Alito refers to the new test as “nebulous.” Id. at 17.
30 Slip op. at 15 (emphasis added).
31 Slip op. at 16
34 Dissent Op. at 1.
35 33 U.S.C. § 1365(a), (b)(1)(B).
36 Id. § 1365(a).
37 Id. § 1365(f)(1) (citing to Section 1311, regarding the illegality of pollutant discharges except in compliance with law).
38 Dissent Op. at 12 (citing to 40 C.F.R. § 19.4 on current monetary sanctions and 28 U.S.C. § 2462 as it relates to the applicable statute of limitations period).
39 Id. at 12-13.
40 Given the broad definition of “pollutant” under the Clean Water Act, it is assumed for purposes of this discussion that a discharge of pollutants has occurred.
41 See, supra at n. 7.
42 See, Haw. Wildlife Fund, 24 F. Supp. 3d at 989.
43 See, supra at n. 7.
44 Haw. Wildlife Fund, 24 F. Supp. 3d at 985.
45 Slip op. at 17.
47 547 U.S. 715 (2006)
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.