April 27, 2020

SCOTUS Decides Landmark Clean Water Act Case

On April 23, 2020, the U.S. Supreme Court decided County of Maui v. Hawaii Wildlife Fund, a much anticipated decision addressing the scope of federal regulatory power under the Clean Water Act (CWA). We previously addressed the major case facts and analyzed the November 2019 oral arguments here.

Maui presented the question of whether the CWA requires a discharge permit when pollutants originate from a point source but are conveyed to navigable waters by a nonpoint source, here, groundwater. The Court held in a 6-3 opinion 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 rejected the positions of the multiple interested parties—environmentalist, industry, and government—as “extreme.” The Court likewise criticized the Ninth Circuit for applying the overly broad “fairly traceable” standard. As a result, the Court vacated the Ninth Circuit’s decision affirming summary judgment and remanded the case for further proceedings consistent with the “functional equivalent” test.

Nevertheless, Maui represents a victory for conservationists who maintain the decision plugs a potential loophole in the CWA allowing dischargers to avoid the CWA permitting process. Conversely, those who advocated for the Court to adopt a bright-line standard are calling the decision disappointing because the new, heavily fact-dependent, standard offers little in the way of clarity for businesses and regulators who will continue to struggle with the basic question: “must a discharge source obtain a discharge permit or not”?

A.   How the Parties Wanted the Court to Rule

The facts of Maui are straightforward. The County of Maui operated a wastewater facility (a point source) and used injection wells to discharge wastewater into the groundwater system (a non-point source). It is undisputed that pollutants from the facility ended up in the Pacific Ocean (a navigable water) via the groundwater system. Maui argued it did not need a permit from the U.S. Environmental Protection Agency (EPA) because the pollutants did not come “from” the wastewater facility, but rather travelled approximately half a mile from the facility to the Pacific Ocean via groundwater. Various environmentalist groups called this an unpermitted discharge and filed a CWA suit.

The district court granted the environmentalists summary judgment, and the Ninth Circuit affirmed. In so holding, the Ninth Circuit ruled that Maui required a CWA permit because the pollutants were “fairly traceable” from a point source (the wastewater treatment plant) to a navigable water (the Pacific Ocean). Environmentalists advocated for the Supreme Court to affirm the Ninth Circuit’s holding and adopt the Ninth Circuit’s broad interpretation of the CWA on review.

In opposition, Maui argued for the Court to reverse the Ninth Circuit’s decision affirming summary judgment and adopt a bright-line test. Maui, along with the Environmental Protection Agency (EPA), contended the CWA’s permitting requirement does not apply if a pollutant, having emerged from a point source, must travel through any amount of groundwater (or other non-point source) before reaching navigable waters. Maui further argued that the statutory meaning of “from any point source” is not about where the pollution originated, but about how it got there. Thus, in Maui’s view, a permit is required only if a point source itself directly delivers the pollutant to navigable waters.

B.   Why the Court Dispensed with the Parties’ Positions as “Extreme”

Justice Breyer wrote the majority opinion, joined by Chief Justice Roberts and Justices Kavanaugh, Ginsburg, Kagan, and Sotomayor. The majority rejected the proposed “fairly traceable” standard as too broad. Since nearly all groundwater eventually reaches a jurisdictional navigable water, the fairly traceable standard would allow EPA to assert permitting authority over pollutants “many years after their release and in highly diluted forms.” Given the sophistication of modern technology, “traceability” of pollutants is no longer meaningfully limited by proximate causation principles and would include nearly all discharges within the scope of the CWA. Moreover, the majority explained the fairly traceable standard’s broad grant of federal permitting authority conflicted with Congress’ intent to leave substantial responsibility and autonomy to the States as to groundwater pollution and non-point source pollution.

The majority likewise rejected the narrow interpretation of federal jurisdiction advocated by Maui and the EPA. The Court noted the CWA is “significantly broader than the total exclusion of all discharges through groundwater.” The majority found the bright-line interpretation “would risk serious interference with EPA’s ability to regulate ordinary point source discharges.” Although Congress did not intend the CWA to preempt state regulation of groundwater and nonpoint source pollution, the majority also disagreed that “Congress could have intended to create such a large and obvious loophole” in the scope of federal jurisdiction. Contrary to Maui’s position, CWA statutory language use of the word “from” a point source focuses on the origin of pollutants, not how they arrived at a navigable water.

C.   What the Court Actually Adopted – The “Functional Equivalent” Standard

Neither party nor the EPA advocated for the Court to adopt the “functional equivalent” standard. This new standard reflects a middle ground between the parties’ positions, and the Court is leaving it to the lower courts to apply the highly fact-specific inquiry to evaluate whether an indirect discharge to navigable waters from a point source via groundwater or other nonpoint source has reached the “same result” as direct discharge from a point source to navigable waters.

The Court specifically declined to define “functional equivalent” or “same result.” Instead, the Court emphasized a range of factors relevant in determining whether a CWA permit is necessary for a discharge of pollutants. The Court noted that transit time and distance traveled are key factors for lower courts to consider, as well as other potentially relevant factors including but not limited to the following:

  • 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 water relative to the amount leaving the point source;
  • The manner by or area in which the pollutant enters the navigable water; and
  • The degree to which the pollutant maintains its specific identity.

In adopting this functional equivalent standard, the Court instructed that the focus of the inquiry should be to advance the statutory purposes of the CWA. In other words, decisions should not create serious risks of either avoiding EPA’s federal permitting authority or undermining state regulation of groundwater and other non-point sources.

D.   Implications of Maui for Regulated Entities

The Maui court’s adoption of the functional equivalent standard provides little certainty regarding the scope of federal jurisdiction for regulators, businesses and private citizens whose activities may implicate surface or groundwater regulation. The “functional equivalent” test is, by the Court’s own admission, purposely not a “bright-line rule.” It remains to be seen how lower courts will define and apply the functional equivalent standard and analyze the various (and seemingly unlimited) factors in deciding whether a discharge from a point source into a navigable waterway via a non-point source is the “functional equivalent” of a discrete discharge. Some may take comfort in the fact that the functional equivalent test, although new Supreme Court jurisprudence, is similar to how many lower courts have analyzed this issue in the past.

Nevertheless, Maui invites courts to consider additional factors not identified by the majority. This may cause inconsistent rulings across the country as lower courts work to refine the functional equivalent standard. There is meaningful debate about whether Maui will increase the risk of litigation in the near-term as district courts and regulators flesh out the new factor-driven analysis for federal CWA jurisdiction.

In the meantime, clients should remember that they may be liable under state law for indirect discharges to groundwater or other nonpoint sources even if such discharges are deemed outside the scope of the federal CWA permitting program.

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