In a busy week for environmental decisions, the Supreme Court of the United States ruled on April 23, 2020 on its second major case,[1] County of Maui v. Hawai’i Wildlife Fund, finding a middle ground in its 6-3 decision on whether pollutants that flow through groundwater into a protected waterway require a permit under the Clean Water Act (CWA). Enacted in the early 1970s, the CWA requires those who directly discharge pollutants into "navigable waters," such as oceans, rivers, streams and ponds, to obtain a permit (known as a National Pollutant Discharge Elimination, or "NPDES," permit); whereas, it leaves groundwater regulation generally within a state’s jurisdiction. In the case at hand, the Supreme Court considered the law’s applicability to a decades-old wastewater treatment plant in Maui, Hawaii that was injecting wastewater into underground wells. From the wells, the wastewater entered the groundwater and eventually reached the Pacific Ocean, a navigable water. Thus, the Supreme Court had to decide whether the CWA mandates facilities to obtain NPDES permits if these facilities are indirectly discharging pollutants into a protected waterbody.

Background and Arguments

Since the 1970s, Maui’s Lahaina wastewater treatment facility has been discharging daily millions of gallons of treated sewage which then moves through groundwater for about one-half mile into the Pacific Ocean, thereby damaging a once-pristine coral reef. The Hawaii Wildlife Fund sued, claiming the discharge is illegal in the absence of a permit. Under the CWA, sewage plants, and other polluters, must obtain an NPDES permit when pollutants are discharged via, for example, a pipe from their source directly to federally-protected waterbodies, and those that fail to obtain such a permit can be subject to daily fines of more than $50,000.00.

Because Maui’s wastewater facility does not discharge its pollutants directly into the ocean, and groundwater is not federally regulated, the case turned on whether NPDES permits are required for a sewage treatment plant that sends its wastewater deep underground, which wastewater then travels some distance before reaching the Pacific Ocean. The U.S. Court of Appeals for the 9th Circuit ruled that an NPDES permit is required if the pollution is "fairly traceable" to a source, thus handing a win to the Wildlife Fund, and the County of Maui (the "County") sought Supreme Court review.

Before the Supreme Court, environmental groups argued that any discharge originating from a "point source," such as a pipe, ditch, or channel, that reached a navigable water should require an NPDES permit. Otherwise, they warned, the County and other polluting industries could circumvent the law by simply repositioning their pipes so that polluted material was not channeled directly into protected waterways, by perhaps having their pipes empty 5 feet from such waterways. In contrast, the County, with support from the U.S. Environmental Protection Agency (EPA), asserted that the text of the CWA establishes that the act does not apply to discharges which travel through groundwater before reaching their final destination, and that state laws are sufficient to regulate flows through groundwater to a protected body of water. In supporting the County, EPA relied on a recently-developed interpretation, with this position reversing four decades of previous EPA practice that had applied the CWA to discharges of pollution which reach protected waters through groundwater if a "direct hydrological connection" exists. EPA’s new view, however, focused on the need for a point source, such as a pipe, to be the conduit through which the pollutant is delivered into the protected waterway in order for the discharge to be regulated. Under this argument, unless a pollutant is discharged straight from a point source into the waterway, without traveling first through groundwater (a nonpoint source), the CWA permit requirement does not apply. Therefore, according to this view, the County would not need a permit under the CWA.

A New Multifactor Test

Rejecting both extremes, the Supreme Court established a new standard in the Maui case for deciding whether discharges require NPDES permits under the CWA. Because the lower court had not applied the proper standard, instead employing a more expansive, “fairly traceable from the point source to a navigable water” test, the case was remanded for further review. Under the Supreme Court’s holding, NPDES permits must be obtained where the discharge constitutes either "a direct discharge from a point source into navigable waters or . . . the functional equivalent of a direct discharge." The Court listed seven non-exclusive factors to consider in applying the "functional equivalent" test but highlighted two as the most important: (1) the distance that the pollution must travel to reach a protected waterway, and (2) the duration of time for such pollution to reach the waterway. Other possibly relevant factors include the nature of the material through which the pollutants travel; degree of dilution before reaching the navigable water; amount of the pollutant entering the waterbody compared to the amount originally discharged; manner by which and area in which the pollutant enters the waterbody; and degree to which the pollutant’s specific identity has been maintained when it enters the waterbody. To illustrate application of this new standard, the opinion noted that if a pipe ends miles from navigable waters and discharges pollutants that first travel via groundwater mixing with other material before eventually ending up in navigable waters "many years later," then the CWA’s permitting requirements "likely” do not apply. When applying the test to specific cases, the Supreme Court admonished lower courts to bear in mind that Congress intended the CWA to provide federal regulation of identifiable sources of pollutants entering navigable waters without undermining a state’s regulatory authority over land and groundwater.

Thus, the Supreme Court declined to adopt either side’s position and opted instead for fact-specific analysis in each case. However, by refusing to set out a "bright line" test, the new standard may prove problematic in defining what constitutes the "functional equivalent of a direct discharge from a point source into navigable waters."

Possible Implications

As the "functional equivalent" test does not provide clear guidance for its application, the Supreme Court’s ruling could yield inconsistent results as different courts grapple with the new standard. Consider the following examples of groundwater discharge and whether an NPDES permit must be obtained if the polluted groundwater eventually reaches a protected waterbody:

• homeowners or businesses using septic systems with drain fields that discharge into groundwater;
• power companies storing coal ash (the waste produced from coal-fired power plants) in manmade ponds that seep into groundwater;
• oil and gas companies whose spills seep into the ground via a crack in the pavement;
• golf courses with constructed wetlands where contaminated runoff is collected for treatment and infiltrates into the ground; and
• farming and livestock operations that manage manure and other waste products.

In the absence of a bright-line rule for applying the CWA’s permitting requirements, the Court’s "functional equivalent" test seems destined to generate ongoing litigation. Indeed, the Supreme Court anticipates that the standard will be refined through future lawsuits as the lower courts confront different fact patterns or perhaps through EPA-issued guidance. In the meantime, some industry observers fear that businesses such as mining, power generation and transmission, and large-scale ranching and agriculture may run afoul of this test, leading to lawsuits challenging widespread activities previously left to state regulation.

[1] On April 20, 2020, the United States Supreme Court ruled in Atlantic Richfield Co. v. Christian that landowners who are potentially responsible parties under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 or CERCLA are not precluded from filing separate state law claims, with the Environmental Protection Agency’s approval, to require further remediation of contaminated sites already subject to cleanup under the federal statute.