Cases decided by federal courts in Illinois and the Seventh Circuit have held that groundwater does not implicate the CWA, even if there exists a hydrological connection between groundwater and navigable waters. In Vill. of Oconomowoc Lake v. Dayton Hudson Corp., 24 F.3d 962, 965 (7th Cir. 1994), the Seventh Circuit opined that “we are confident that the statute Congress enacted excludes some waters, and groundwaters are a logical candidate.” In a more recent case involving seeps from unlined coal ash pits at a retired coal-fired power plant, which allegedly migrated through groundwater to navigable waters, the U.S. District Court for the Central District of Illinois, following Vill. of Oconomowoc Lake, dismissed CWA claims brought by environmental groups. Prairie Rivers Network v. Dynegy Midwest Generation, 350 F.Supp.3d 697 (C.D. Ill. 2018).
On April 23, 2020, the United States Supreme Court issued its opinion in County of Maui, Hawaii v. Hawaii Wildlife Fund, No. 18-260, 140 S. Ct. 1462, 590 U.S. ___ (2020), a case which pitted environmental groups against a wastewater reclamation facility operated by the County of Maui, and decided a fundamental question regarding the scope and application of the Clean Water Act (“CWA”). According to the Court’s opinion, the County of Maui’s wastewater treatment facility pumps around
4 million gallons of treated wastewater into four wells on a daily basis. It was undisputed that the wastewater travels a half mile through groundwater and is then discharged into the Pacific Ocean. The question presented to the Supreme Court was whether the CWA “requires a permit when pollutants originate from a point source but are conveyed to navigable waters by a nonpoint source, here, groundwater.” Id. at 1468.
The Ninth Circuit upheld the lower court’s judgment in favor of the environmental groups and opined that a permit is required when the pollutants are “fairly traceable” from the point source to a navigable water. The County of Maui appealed the Ninth Circuit’s decision and argued that the CWA’s permitting requirement does not apply if a pollutant discharged from a point source must travel through any amount of groundwater before reaching navigable waters. Interestingly, the United States sided with the environmental groups in the case before the Ninth Circuit, but it did an about-face in the Supreme Court case and supported the County of Maui’s position. Moreover, in an effort to guide the Court’s decision, the United States Environmental Protection Agency (“USEPA”) issued an Interpretive Statement in 2019, which proposed that all releases of pollutants to groundwater are excluded from the CWA permitting requirements, even if the pollutants are carried to navigable waters via groundwater.
The Supreme Court rejected all of the proffered statutory interpretations, and held that the CWA “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.” The Court went on to outline seven factors that “may prove relevant” in a ‘functional equivalency’ determination: (1) transit time, (2) distance traveled, (3) nature of the material through which the pollutant travels, (4) the extent to which the pollutant is diluted or chemically changed in transit, (5) the change in the amount of the pollutant during transit, (6) the manner in which the pollutant enters navigable waters, and (7) the degree to which the pollutant maintains its specific identity. Id. at 1476-77. According to the Court, time and distance “will be the most important factors in most cases, but not necessarily every case.” Id. at 1477. The Court provided no specific parameters for time or distance, other than noting that the CWA would clearly apply to a discharge from a pipe that travels only a few feet through groundwater before entering navigable waters, but that CWA permitting requirements “likely do not apply” to a discharge from a pipe that must travel 50 miles before ending up in navigable waters many years after the release.
According to the Earthjustice webpage, Maui is the “Clean Water Act Case of the Century.” Hyperbole aside, the Maui decision calls into question the Seventh Circuit decisions in Vill. of Oconomowoc Lake and Prairie Rivers Network. Moreover, it can be safely assumed that there will be an increased number of CWA citizens suits in Illinois and elsewhere involving pollution transported by groundwater to surface waters.
The important questions raised by the Maui decision include the following, which are discussed below.
How does the County of Maui decision affect the applicability of the CWA to groundwater contamination?
Section 301 of the Clean Water Act prohibits the discharge of “any pollutant by any person.” 33 U.S.C. § 1131(a). “Discharge of a pollutant” is defined as “any addition of any pollutant to navigable waters from any point source.” 33 U.S.C. § 1162(12). However, Section 311 of the CWA allows the United States Environmental Protection Agency (“USEPA”) or any authorized state to issue a permit for the discharge of a pollutant. 33 U.S.C. § 1142(a)(1). Under the Maui holding, a CWA permit may now be required for certain point source discharges of pollutants that are carried by groundwater to navigable waters and are the “functional equivalent” of a direct point source discharge.
While Maui provides some clarification as to whether a CWA permit may be required for groundwater discharges to navigable waters, it also raises the stakes for resolution of other CWA legal issues involving the definitions of “point source” and “waters of the United States.” “Point source” is broadly defined in the CWA as “any discernible, confined and discrete conveyance, including, but not limited to 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). Several federal courts have wrestled with the interpretation of “point source,” sometimes reaching differing results under similar facts. As one example, the federal court in Yadkin Riverkeeper, Inc. v. Duke Energy Carolinas, LLC, 141 F.Supp.3d 428, 443-444 (M.D.N.C. 2015) reached the conclusion that coal ash lagoons are “confined and discrete” and, if they are unlined and leaking pollutants into groundwater, are also a “point source.” However, a different result was reached in Kentucky Waterways Alliance v. Kentucky Utilities Co., 905 F.3d 925, 934 n. 8 (6th Cir. 2018), abrogated on other grounds by County of Maui, where the Sixth Circuit held that coal ash ponds are not conveyances because “they do not ‘take or carry [pollutants] from one place to another’” but rather “store coal ash in one place.” Because CWA permits are only required for point source discharges, judicial interpretations of “point source” will significantly impact the scope and applicability of the Maui decision.
As defined in the CWA, “navigable waters” means “waters of the United States.” 33 U.S.C. § 1362(7). On April 21, 2020, USEPA and the Department of the Army published the Navigable Waters Protection Rule, the final step in the process to repeal and replace the 2015 Obama Administration Rule defining “waters of the United States” (or “WOTUS”). The intent behind the Navigable Waters Protection Rule is to provide clarity as to which waters are included in WOTUS, and which waters are non-jurisdictional waters. The Navigable Waters Protection Rule takes effect on June 2, 2020, and has already been challenged by seventeen states and a large number of environmental groups. Because the CWA permitting requirements only apply to discharges to “navigable waters,” the WOTUS definition also impacts the applicability of Maui.
Who will be impacted by the County of Maui decision?
Industries that utilize lagoons or impoundments which are located in proximity to surface water bodies are among those most directly affected by the Maui decision. These may include coal ash impoundments, concentrated animal feeding operations, coal mines, and lagoons and retention basins at wastewater treatment facilities. Oil and gas operations, injection wells, and even septic systems with nearby surface water are also implicated by the Maui decision. Finally, aboveground or belowground releases of pollutants, e.g., from pipelines or aboveground/underground storage tanks, where the released material reaches groundwater and is carried to a navigable water, may also be considered the functional equivalent of a direct point source discharge under the Maui test.
Who will determine whether a groundwater discharge is the functional equivalent of a direct point source discharge into navigable waters?
In the absence of regulations or agency guidance, federal district courts will determine how the “functional equivalent” test is to be applied on a case-by-case basis. The Supreme Court cautioned that such decisions should not undermine state regulation of groundwater or create loopholes that undermine the basic objectives of the CWA. Id. at 1477. The Supreme Court also encouraged district courts to exercise judicial discretion regarding CWA penalties “when, for example, a party could reasonably have thought that a permit was not required.” Id.
On May 4, 2020, the U.S. Supreme Court granted certiorari in a case decided by the Fourth Circuit, Upstate Forever v. Kinder Morgan Energy Partners, LP, 887 F.3d 637 (4th Cir. 2018). Upstate Forever involved a 2014 spill of over 369,000 gallons of gasoline from a pipeline owned by the defendant. Kinder Morgan repaired the pipeline shortly after the initial spill, but the plaintiff environmental groups alleged that contaminants continue to migrate through groundwater to navigable waters. The Fourth Circuit held that the only precondition for a CWA violation is that plaintiff allege an ongoing addition of pollutants to navigable waters originating from a point source (the pipeline). In its May 4, 2020, decision, the Supreme Court remanded the Upstate Forever case to the Fourth Circuit for further consideration in light of the Maui decision. Cases like Upstate Forever will flesh out the scope and reach of the Maui decision and the applicability of the Maui “functional equivalent” factors. Regulated industries and trade associations will need to monitor such cases and decisions to have an understanding as to how the “functional equivalent” test is being applied.
The Supreme Court’s decision also noted that USEPA (and/or delegated states) can provide administrative guidance regarding “functional equivalent” determinations through (i) individual permit decisions, (ii) development of general permits, or (iii) regulatory standards. Maui, 140 S.Ct. at 1477. Given the absence of a clear test for “functional equivalence,” there is potentially a large role for USEPA to fill through guidance and permit decisions, beginning with the replacement of the 2019 Interpretive Guidance.
How are the “functional equivalent” factors to be applied?
The seven factors outlined in the Supreme Court’s decision are identified as factors that “may prove relevant (depending upon the circumstances of a particular case) …” Id. at 1476 (emphasis added). Of those factors, the Supreme Court noted that “[t]ime and distance are obviously important,” and, as noted above, provided specific examples of when application of those particular factors would clearly indicate that a CWA permit is required (a discharge pipe ending a few feet from navigable waters), and when application of those factors would indicate a CWA permit is not required (a discharge pipe 50 miles from navigable waters and many years required for the pollutants to reach navigable waters). Id. However, the Supreme Court acknowledged that there will be “middle instances” that will have to be decided based on the facts of a particular case. Until USEPA provides regulatory guidance, it will be up to the federal courts to issue decisions in the “middle instance” cases.
What happens next?
Companies that have unlined lagoons, impoundments, or wells in close proximity to surface waters may have to decide whether a National Pollutant Discharge Elimination System permit should be sought for potential discharges of impacted groundwater to surface water, or whether they have a supportable argument that there is no “functional equivalent” discharge. Such determinations may necessitate comprehensive evaluations of existing data regarding groundwater conditions, gradient and hydrogeology, and strategic decisions about whether or how to collect new analytical data.
USEPA will also have to determine the best way to incorporate the Maui decision in the CWA regulatory framework. Delegated states like Illinois can begin considering whether there are groundwater discharges that are appropriate for general permit coverage. Additional questions raised by the Maui decision concerning the intersection of state cleanup programs and CWA permitting requirements for groundwater discharges will also need to be contemplated.
 Upstate Forever, No. 18-268, __ S. Ct.__, 2020 WL 2105201 (May 4, 2020)
Associate attorneys Brian Dodds and Julieta Kosiba contributed to this blog post.