By Andrew H. PerellisJeryl L. Olson, and Patrick D. Joyce

Seyfarth Synopsis: Rather than providing clarity, the Supreme Court introduced substantial uncertainty into the NPDES permitting process involving situations where a point source discharge first enters groundwater and then migrates some distance – short or long – before discharging into a “navigable water” that is subject to the Clean Water Act.

In a split decision on April 23, 2020, the Supreme Court issued an opinion providing environmental attorneys with fodder to generate substantial, future legal fees litigating whether industrial discharges that travel through groundwater before discharging into the ocean, a major river, its tributaries, or other “navigable water,” require a point source discharge permit under the Clean Water Act, known as an NPDES permit (NPDES being the acronym for National Pollutant Discharge Elimination System). Maui v. Hawaii Wildlife Fund et al., case number 18-260. Under a new test devised by the SCOTUS majority, NPDES permits are required not only when there is a discharge directly to a navigable water, but also when there is the “functional equivalent” of a direct discharge. Justice Breyer delivered the opinion of the Court, joined by the three other more liberal justices (Justices Ginsburg, Sotomayer and Kagan) as well as Chief Justice Roberts and Justice Kavanaugh.

The SCOTUS majority provided little guidance on what qualifies as a “functional equivalent.” It provided examples on either extreme, but for those future cases that fall into the middle, they will need to be decided on a case-by-case basis. “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.” On the other extreme, a pipe ending 50 miles from navigable waters and discharging pollutants that travelled through groundwater for “many years” “likely” requires no permit. “Time and distance” are important but not exclusive considerations.

The need for case-by-case determination gave the SCOTUS majority no cause for concern, as lower courts can adjudicate and refine the boundaries of the new test, and EPA can do so by the administrative process. For those unlucky regulated to have guessed wrong about the need for a permit, the SCOTUS majority offered this solace: “We expect that district judges will exercise their discretion mindful, as we are, of the complexities inherent to the context of indirect discharges through groundwater, so as to calibrate the Act’s penalties when, for example, a party could reasonably have thought that a permit was not required.”

In dissent, Justice Alito observed the real risk presented by litigating the “middle instances,” stating, “the consequences to landowners even for inadvertent violations can be crushing,” particularly when faced with a 5-year statute of limitations and $54,833 in fines per day (or more than $20 million per year). And (as we environmental litigators know only all too well) Justice Alito continued, stating, “the availability of citizen suits only exacerbates the danger to ordinary landowners. Even when the EPA and the relevant state agency conclude that a permit is not needed, there is always the possibility that a citizen suit will result in a very costly judgment.”

The Clean Water Act forbids the “addition” of any pollutant from a “point source” to “navigable waters” without the required NPDES permit. A “point source” is defined as “any discernible, confined and discrete conveyance . . . from which pollutants are or may be discharged” including, e.g., any “pipe, ditch, channel, tunnel, conduit [or] well…”

In the underlying decision below, the Ninth Circuit ruled that a discharge “from” a point source that first travels through a non-point source medium – such as groundwater – before discharging to a navigable water requires an NPDES permit if the discharged pollutants are “fairly traceable” to the point source. The Solicitor General, on behalf of the United States, urged the Supreme Court to reject this approach, arguing that NPDES permits apply only if the point source discharges “directly” into a navigable water. Indeed, U.S. EPA had previously issued an Interpretative Statement to that effect, concluding: “the best, if not the only, reading” of the statutory provisions is that “all releases of pollutants to groundwater” are excluded from the scope of the permitting program, “even where pollutants are conveyed to jurisdictional surface waters via groundwater.” 84 Fed. Reg. 16810, 16811 (4/23/2019).

The majority decision rejected EPA’s interpretation as too narrow. But it equally rejected the “fairly traceable” test as being too broad. The Ninth Circuit test, according to the SCOTUS majority, would allow EPA to assert permitting authority over the release of pollutants that reach navigable waters from great distances away and/or many years after their release.

The decision is interesting as well for how the Justices address, or fail to address, the notion of judicial deference to EPA’s interpretation of the statute. Those practitioners watching SCOTUS for indications of whether so-called “Chevron Deference” [Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984)] will survive or be modified in future court rulings should give Maui v. Hawaii Wildlife Fund a close read.

For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety & Environmental Team.