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04.28.2020 | Legal Advisory

Last week, the Supreme Court addressed a longstanding issue about whether pollutants discharged to groundwater but that eventually reach a navigable water of the United States are subject to federal regulation under the Clean Water Act. The decision could have significant impacts on Massachusetts entities that operate wastewater treatment facilities under only a groundwater discharge permit issued by the state Department of Environmental Protection.

On April 23, 2020, the Supreme Court, in a 6-3 ruling, held in County of Maui, Hawaii v. Hawaii Wildlife Fund et al. that the Clean Water Act (CWA or the Act) requires a party to seek a permit from the Environmental Protection Agency (EPA) if the party’s addition of pollutants into navigable waters through groundwater is the “functional equivalent of [a] direct discharge from the point source into navigable waters.” (emphasis added). The Clean Water Act forbids the addition of pollutants from a point source to navigable waters without a permit from the EPA. The question presented in County of Maui was whether the Act requires a permit when the pollutants originate from a point source but are conveyed to navigable waters by groundwater, which is a nonpoint source.[1]

The petitioner, the County of Maui, operates a wastewater reclamation facility that pumps partially-treated sewage water into groundwater through wells (point sources) hundreds of feet underground. The treated water then travels about a half mile through groundwater and discharges into the Pacific Ocean (a navigable water). In 2012, several environmental groups sued the County claiming that it violated the Clean Water Act by discharging a pollutant into the Pacific Ocean without an EPA permit.

The Supreme Court was essentially presented with two competing tests: First, environmental groups proposed an adaptation of the Ninth Circuit’s test, which would require permitting whenever the pollutants are “fairly traceable” from the point source to a navigable water, even if it traveled extensively through groundwater before reaching the navigable water. As the Court noted, the focus on tracing the pollutant to the point source, coupled with modern science, could have allowed EPA “to assert permitting authority over the release of pollutants that reach navigable waters many years after their release (say, from a well or pipe or compost heap) and in highly diluted forms.” [2] The second, proposed by the County and the Attorney General, was a bright line test stating that a “point source” should be construed as the means through which pollutants are delivered directly to navigable waters. If groundwater lies between the point source and the navigable water, no permit is required. The Court rejected both tests.

Instead, the Supreme Court struck a middle ground, holding “that the statute 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.” (emphasis in original). Practically speaking, this ruling means that whether a federal permit is required must be determined on a case-by-case basis.

The Supreme Court gave some guidance as to what would amount to the “functional equivalent of a direct discharge,” but ultimately left it to the lower courts to define the parameters. It listed time and distance as the two most important factors in most (but not necessarily all) cases. “Where a pipe ends a few feet from navigable waters and the pipe emits pollutants that travel those few feet through groundwater (or over the beach), the permitting requirement clearly applies. If the pipe ends 50 miles from navigable waters and the pipe emits pollutants that travel with groundwater, mix with much other material, and end up in navigable waters only many years later, the permitting requirements likely do not apply.”

The Court also listed the following factors as possible considerations depending on the circumstances of the discharge:

• “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 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.”

In interpreting the “functional equivalent” standard, the Court stated that “[d]ecisions should not create serious risks either of undermining state regulation of groundwater or of creating loopholes that undermine the statute’s basic federal regulatory objectives.”

Through their separate dissents, Justices Thomas and Alito argued that the Act requires a federal permit only when a point source discharges directly into navigable waters. The majority disagreed with the dissenting justices’ respective linguistic interpretations of the Act and found their positions to be too extreme. The majority noted, specifically in response to Justice Thomas’ interpretation, that the position would allow for loopholes in the permitting requirements, a flaw the majority noted in the County and government’s bright line test as well:  for example, a party could evade the permitting requirement by moving a point source a few feet away from navigable waters so that it does not directly discharge into the navigable water. 

The Supreme Court’s decision also invalidates the EPA’s 2019 Interpretive Statement (84 Fed.Reg. 16810 (2019)), which categorically excluded all releases of pollutants to groundwater from a federal permitting requirement, even if the pollutants eventually made their way to jurisdictional surface waters through groundwater. A 2019 opinion in Massachusetts federal court, Conservation Law Foundation, Inc. v. Longwood Venues & Destinations, Inc. et al, deferred to the Interpretive Statement in addressing the same legal issue as County of Maui. In Longwood Venues, the court considered the discharge from the Wychmere Beach Club’s wastewater treatment facility, located in Harwich on Cape Cod. According to the opinion, the facility’s treated sewage made its way to leach pits (point sources), which sat between 100-500 feet from a harbor and channel that joined the Atlantic Ocean. The Conservation Law Foundation sued the defendants, claiming that they were discharging pollutants into navigable waters without a permit. The district court found for the defendants based on deference to the EPA’s determination in its Interpretive Statement.[3] However, because of County of Maui, the case will likely be remanded to the district court for a new decision under the Supreme Court’s “functional equivalent” standard. 

County of Maui could have significant implications for Massachusetts entities that operate wastewater treatment facilities under only a Massachusetts discharge permit issued by the state Department of Environmental Protection—especially those facilities located near the ocean, a river, or other surface water subject to regulation under the Act. These facilities might need to obtain a federal permit if their discharge meets the new “functional equivalent” standard. But without further guidance, such as the lower courts’ interpretation of the Supreme Court’s suggested factors or action from the EPA, the scope of the permitting requirement is now somewhat unclear.

In response to concerns about the “functional equivalent” test overly expanding the scope of the statute and requirements for federal permits, the Supreme Court noted the lower courts’ discretion in penalizing violators as a way of controlling any hardship or unjust expansion of the statute’s reach. For example, a lower court has discretion to adjust a penalty if a party reasonably thought that a permit was not required under the new test. However, without further guidance, this after-the-fact form of mitigation asks entities to first make an educated guess as to whether they need a federal permit. Also, the lower courts’ discretionary powers only arise when an entity has already been subject to the likely substantial costs of a citizen suit or an enforcement action and penalty (even if mitigated).

A better remedy, which the Supreme Court also noted as a possibility, might be for a state like Massachusetts, with a robust water program that already considers impacts of groundwater pollutants on proximate surface waters, to have the EPA issue a general permit under the Act. Until then, groundwater discharge facilities are left to determine whether they now need a federal permit and may face increased scrutiny from EPA or a citizen suit.

If you have any questions about the scope of this decision or its impact on your facility, please feel free to contact a member of Nutter’s Environmental practice group. 

This advisory was prepared by Michael Leon, Mary Ryan, and Matt Snell in Nutter’s Environmental, Regulatory and Compliance practice group. If you would like additional information, please contact one of the above individuals or your Nutter attorney at 617.439.2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.  

[1] A “point source” is “any discernible, confined and discrete conveyance…from which pollutants are or may be discharged.” CWA § 502(14). This includes “any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft” and excludes “agricultural stormwater discharges and return flows from irrigated agriculture.” CWA § 502(14).

[2] The environmental groups attempted to narrow the “fairly traceable” standard by adding a proximate cause element, which the Court rejected.

[3] The Foundation appealed this decision. The First Circuit granted a motion for a stay of the appeal pending the Supreme Court’s decision in County of Maui.