CWA ruling provides limited clarity on when a permit is required

Last month, the U.S. Supreme Court issued its decision in County of Maui, Hawaii v. Hawaii Wildlife Fund, 2020 DJDAR 3677 (April 23, 2020). The County of Maui asked the court to decide "whether the Clean Water Act requires a permit when pollutants originate from a point source but are conveyed to navigable waters by a nonpoint source, such as groundwater." In what appears to be a "split the baby" approach, the court settled on a "functional equivalent" test that provides limited clarity on when a permit is required.

The case highlights the difficulty in regulating water in the United States. One of the main issues that the court struggled with (and that many amici weighed in on) is the nature of the hydrologic cycle and the relationship that has to municipal and industrial operations. Water moves between surface streams and groundwater and the ocean as part of an ongoing cycle. Sometimes it brings pollutants with it. The connectivity of water is not reflected in the federal laws that regulate water pollution. The federal Clean Water Act is primarily aimed at regulating surface water. Regulation of water supply, and groundwater is generally left to the states. In this case, the court was tasked with deciding how far to stretch federal law to address activities that will have an impact downstream.

Under the Clean Water Act, a discharge permit is required if any pollutants are added from a "point source" to "navigable waters." The term "navigable waters" does not include groundwater. The issue in this case was whether the act requires a permit when pollutants flow through groundwater before reaching surface waters.

The case centers on the County of Maui's wastewater treatment facility that filters and disinfects the sewage it receives, then releases the wastewater into four onsite injection wells. The injection wells are long pipes into which the wastewater is pumped. The wastewater then travels approximately 200 feet underground into a shallow groundwater aquifer beneath the facility. It is undisputed that wastewater from these wells eventually makes its way into the Pacific Ocean via groundwater. On average, it took approximately 10 months for groundwater containing County wastewater to enter the ocean along approximately two miles of coastline.

Environmental groups sued, claiming the county needs permit for its injection of treated wastewater into the underground wells because the treated wastewater eventually makes its way to the ocean. The federal district court in Hawaii, and the 9th U.S. Circuit Court of Appeals both issued decisions in favor of the environmental groups.

The Supreme Court issued a decision reversing the 9th Circuit, but not clearly exonerating the County of Maui. Rather than holding that discharges to (or through) groundwater are per se exempt from the Clean Water Act's permitting scheme, as the Environmental Protection Agency and the county had requested, the court held that discharges to groundwater that ultimately end up in surface waters will require a permit if the discharge to groundwater is the "functional equivalent" of a direct discharge to a surface water.

The court identified time and distance as the most important factors for determining whether a discharge is the "functional equivalent" of a direct discharge, but also cited a number of other factors that would be material to a decision, including:

• the nature of the material through which the pollutants travels,

• the extent to which the pollutant is diluted or chemically changed as it travels,

• the amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source,

• 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.

The court's decision does not provide a clear answer for when discharges through groundwater require a permit. It does, however, establish a national standard. The "functional equivalent" test is the third standard that has been applied in the Maui case. At the district court level, the court held that a discharge to groundwater would require a permit if the groundwater acted as "conduit" and conveyed the discharge to surface waters. The 9th Circuit held that a discharge would require a permit if it was "fairly traceable" to the original point source.

Other circuits adopted alternative standards, including the 6th Circuit which found that discharges through groundwater are exempt from permitting (see Kentucky Waterways Alliance v. Kentucky Utilities, 17-6155 (6th Cir. Sept. 24, 2018), and Tennessee Clean Water Network v. Tennessee Valley Authority, 3:15-cv-00424, (6th Cir. Sept. 24, 2018); the 7th Circuit, which adopted a similar standard in 1994 (see Village of Oconomowoc Lake v. Dayton Hudson Corp., 24 F.3d 962 (7th Cir. 1994)), and the 4th Circuit, which adopted the 9th Circuit's rationale in the Maui case (see Upstate Forever v. Kinder Morgan Energy Partners, L.P., 887 F.3d 637, 641 (4th Cir. 2018), petition docketed No. 18-268 (Sept. 4, 2018)).

The Supreme Court's decision in Maui settles the circuit split, and "functional equivalent" is now the law nationally.

The case has a number of implications. First, although the court revised the 9th Circuit's rationale, the "functional equivalent" standard will still allow many claims to proceed. Cases that allege a discharge to groundwater is reaching surface waters will go forward, and there will be factual battles about whether the discharge at issue is the functional equivalent of a direct discharge. In this regard, the court's decision will spur future litigation.

Second, there is little question that the court intended its "functional equivalent" test to be more limited than 9th Circuit's "fairly traceable" standard. But it is unclear what that means for Maui County. The 9th Circuit's decision has been vacated and remanded, but it would not be surprising if, on remand, the 9th Circuit found that Maui County needs a permit. On the same facts, a different circuit could easily differ.

The "functional equivalent" standard seems more likely to capture the discharges like those at issue in the 4th Circuit case that was decided shortly after the 9th Circuit's decision in Maui. That case involved a pipeline that discharged gasoline to groundwater. The gasoline flowed through the groundwater and into wetlands that qualify as surface waters under the Clean Water Act. The travel time was relatively short and the spill occurred less than 1,000 feet from the wetlands. This kind of case would appear to require a permits under the new standard, and by extension, other facilities that are similar in nature would probably as well. This includes groundwater infiltration basins, pipelines that are close to surface water bodies, and some types stormwater controls and other green infrastructure.

Lastly, the facts are going to matter. In the Maui case, the court sought to create a standard that would capture discharges that are mere inches from surface waters, but not require permits for every septic system in the United States. It is safe to say that under the "functional equivalent" standard certain types of discharges to groundwater that take many years and/or travel long distances before reaching surface water will remain exempt from the Clean Water Act's permitting requirements. Things like groundwater infiltration projects that have limited connectivity to surface water and/or take many years to reach surface water. However, the Maui decision means that even these activities could face lawsuits and put project operators in the position of having to prove that their activities are the "functional equivalent" of a direct discharge. 