In its April 23, 2020 decision in County of Maui, Hawaii v Hawaii, the Supreme Court expressly invited litigation of future permits for point source water discharges to groundwater. Recent disputes over discovery in the remand shows that not only will the Supreme Court’s decision complicate litigation but it will materially impact permitting of major projects. Until the United States Environmental Protection Agency (“EPA”) promulgates a clarifying rule consistent with the Supreme Court’s decision, applicants for permits for projects that discharge pollutants to groundwater will face uncertainty as to whether their project will require a National Pollutant Discharge Elimination System (NPDES) permit or state equivalent, and whether the EPA will play a role in project permitting. Applicants should plan now to determine whether they want to involve EPA in their permitting process and to develop data consistent with the factors listed by the Supreme Court in County of Maui to prepare for permit review and eventual litigation.
In County of Maui, the Supreme Court attempted to articulate a standard for when an NPDES permit is required under the Clean Water Act (“CWA”) to discharge pollutants from a point source to “navigable waters” if the pollutants are first discharged to groundwater. Not only was this the subject of dispute in the litigation before the Court but it had been a matter of dispute between Circuit Courts.
Taking a middle position among the Circuits, the Supreme Court stated that the statute required a permit for direct discharges to navigable waters from a point source or when there is a “functional equivalent of a direct discharge.” Realizing that this standard has limits as a guide for when permits must be issued, the Court listed several factors that it expected would determine “functional equivalence”. Chief among these factors were “time and distance” between the discharge to groundwater and the impact to navigable waters. The Court also listed several other factors, including (i) the nature of the material through which the pollutant travels, (ii) dilution or chemical change of the pollutant; (iii) the amount of pollutant being discharged to groundwater versus the amount reaching navigable waters; (iv) where and how the pollutant enters navigable waters; and (v) any transformation of the pollutant in groundwater. The Court recognized that this standard required further refining and suggested that district courts could develop a common law of CWA permitting by adjudicating specific examples. However, the Court said nothing about the scale of each factor or interactions among the factors.
While the Court recognized that EPA could provide guidance through individual permit decisions, it did not seem to realize that every agency, whether EPA or a state delegated NPDES authority, will be required to develop an administrative record to support its permitting decision using this standard so that permitting decisions survive expected litigation. Administrative agencies will need permit applicants to develop required information.
Application of the “functional equivalent” standard is already leading to additional litigation over what information is necessary to support standard application. In the remand of the County of Maui decision in the Hawaii district court, the County of Maui and the environmental plaintiffs have filed opposing briefs on whether additional discovery is necessary, even after years of permitting and prior litigation developed an extensive record.
Industries, including those in the mining and energy sectors, which propose projects that will discharge pollutants to groundwater will need to navigate this uncertainty when preparing for the permitting process. Developers should think strategically about whether they want to rely solely on state permitting processes and seek a groundwater only discharge permit or whether they want to involve the EPA in decision making by seeking a NPDES or state equivalent permit. In addition, project developers will need to develop the information necessary to support agency decision making, expecting agency determinations to be litigated. To prepare, project managers should work with counsel and project consultants to develop a strategic permitting plan and outline necessary information as early in the process as possible. This plan should include not only the information developed for permit applications but should start with analyses planned for any environmental review for major projects. This will impact, among other decisions, level of environmental review and project scope.