Clean Water Act Update: SCOTUS’ New “Functional Equivalent” Test and County of Maui vs. EPA’s New Navigable Waters Protection Rule

The legal force of the federal Clean Water Act continues to move in unpredictable directions with as much frequency as the waters the Act regulates. On April 21 and 23, two waves of change crashed into each other when, respectively, EPA issued its Navigable Waters Protection Rule (85 Fed. Reg. 22250) stating the Act does not cover groundwater and then the U.S. Supreme Court ruled in County of Maui v. Hawaii Wildlife Fund (No. 18-260) that the Act does sometimes cover discharges to groundwater. Also, while the Court rejected the Ninth Circuit’s expansive view that the Act applies whenever a discharge to groundwater is “fairly traceable” from a point source to a navigable water, the Court nevertheless adopted a new “functional equivalent” test based on a nonexclusive list of factors that could still capture discharges that arrive at navigable waters after traveling through groundwater “from” a point source. A third wave of change may also be on its way if 17 states, including California, convince the U.S. District Court for the Northern District of California that EPA acted arbitrarily and capriciously in promulgating the Navigable Waters Protection Rule to narrow the definition of “waters of the United States” (“New WOTUS Rule”). See California v. Wheeler, No. 3:20-cv-03005, May 1, 2020.

These changes continue the stormy legacy of Clean Water Act regulation and judicial interpretation that reached a peak in 2006 when the High Court ruled in Rapanos v. United States, 547 U.S. 715, 733 (2006) that navigable waters are not areas that are dry or only have transitory puddles but are also more than waters that are navigable in the traditional sense. Like three notable U.S. Supreme Court decisions before County of Maui – United States v. Riverside Bayview Homes, 474 U.S. 121 (1985), Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001) and Rapanos, 547 U.S. at 739 – the Court in County of Maui again sought to clarify the scope of the Act but the Court’s decision does just the opposite. The decision acknowledges that it does not “clearly explain” when the Act applies, but it anticipates that lower courts and EPA will fill in the gaps as time goes on. Cty. of Maui at *10.

Key Takeaways and Implications

The Court’s decision prompts more questions than answers, forces parties to litigate in pursuit of certainty, and sets a new functional equivalent test that creates significant uncertainty.

• County of Maui initiates a new phase of Clean Water Act interpretation and application to a myriad of fact patterns. While the Court did not order the County of Maui to obtain a permit for its wastewater discharges, on remand, the district court may find a permit is required under the new functional equivalent test. Injection wells with similar characteristics may also require NPDES permits and even more difficult questions will arise when the test is applied to groundwater pollution from accidental or unplanned events – like pipeline ruptures – or surface impoundments.
• The decision expands the Act in a way that contradicts recent EPA guidance, which states that any pollution that moves through groundwater before reaching federal waters is not subject to the Act’s permitting requirements. In contrast, the County of Maui decision held that the Act applied when there is a direct discharge from a point source into navigable waters or when there is the functional equivalent of a direct discharge. (84 Fed. Reg. 16819, 16811, April 23, 2019). Consequently, the decision could render void compliance plans that are based on EPA guidance that exempts groundwater from permitting.
• Because the decision leaves gray areas about what is covered under the Clean Water Act: (1) environmental groups may bring litigation to challenge previously exempt discharges to groundwater, (2) regulated parties will find it difficult to predict whether they must seek a federal permit under the Court’s new test, and (3) costlier and more time-consuming site-specific analysis will need to be undertaken to determine whether injection wells or structures like pipes potentially cause a discharge to groundwater that is functionally equivalent to a discharge to navigable waters from a point source using the Court’s new test.
• Wastewater impoundment facilities now need to undertake numerous evaluations to determine (i) where such structures are located; (ii) whether they discharge to navigable waters; (iii) whether the discharge to groundwater could be construed to be from a point source; (iv) whether the discharges from groundwater to navigable waters require lengthy or short durations of time; (v) how the navigable waters are impacted; and (vi) whether dilution or mixing zone considerations apply to such discharges, particularly those to coastal waters.
• County of Maui and the May 1, 2020 challenge to the New WOTUS Rule may force EPA to revisit how it interprets the scope of the Act. EPA may issue guidance that further defines the Court’s functional equivalent test and EPA might need to go through formal rulemaking to resolve conflicts between the County of Maui decision and the New WOTUS Rule. For example, close proximity now must be a factor that EPA considers, rather than disregards, because County of Maui expanded the permit system to apply to a discharge through groundwater that is close enough to surface waters that it is functionally equivalent to a direct discharge. However, the New WOTUS Rule excludes features like wastewater recycling ponds even “[t]hough these features are . . . often located in close proximity to tributaries or other larger bodies of water.” (emphasis added)

County of Maui Case Summary

The Clean Water Act generally requires a National Pollutant Discharge Elimination System (“NPDES”) permit for the “discharge of any pollutant,” defined as “any addition of any pollutant to navigable waters from any point source.” 33 U.S.C. §§ 1311(a), 1362(12)(A). A point source is defined as “any discernible, confined and discrete conveyance, including but not limited to any … well … from which pollutants are or may be discharged.” Id. § 1362(14). The term “navigable waters” is defined in the statute as “waters of the United States.” However, “waters of the United States” is not defined.

The litigation in the County of Maui decision arose as a citizen suit when Hawai’i Wildlife Fund and other groups sued the County of Maui, alleging the County needed federal permits for injecting wastewater underground from where it migrated to the Pacific Ocean. The District Court granted summary judgment in favor of the citizen plaintiffs, finding that “a considerable amount of effluent from the wells ended up in the ocean” and that the discharge to “nearby groundwater was ‘functionally one into navigable water.’” Cty. of Maui at *4 (citing 24 F. Supp. 3d 980, 998 (D. Haw. 2014)). Notably, the District court cited Healdsburg, which involved a wastewater treatment plant that discharged into a rock quarry pit that provided “a continuous passage of water” to the Russian River through surface wetlands and the underground aquifer. Healdsburg, 496 F.3d at 995-997. Relying in part on Healdsburg, the Ninth Circuit affirmed the lower court in County of Maui, reasoning that the pollutants were “fairly traceable” from a point source (i.e., the injection wells) to a navigable water and more than a de minimis level of pollutants reached navigable waters. Hawaii Wildlife Fund v. Cty. of Maui, 886 F.3d 737, 748 (9th Cir. 2018). The High Court found the Ninth Circuit’s “fairly traceable” standard to be overly broad and vacated and remanded the case in accordance with its “functional equivalent” standard.

The facility at issue in County of Maui injected treated effluent from its wastewater treatment plant into four underground wells located about one half mile from the Pacific Ocean. The county had never been required to obtain federal permits in the past five decades (id. at *17), and, along with EPA under President Trump’s administration, argued that the pollution’s indirect path to the ocean was beyond the scope of the Clean Water Act’s permitting program.

Court’s New “Functional Equivalent” Test

The Court created a multi-factor test to determine when the Clean Water Act requires permits for discharges through groundwater. Though the Court’s test appears broad, the Court noted that “Whether pollutants that arrive at navigable waters after traveling through groundwater are ‘from’ a point source depends upon how similar to (or different from) the particular discharge is to a direct discharge.” Id. at *10. To determine the similarity between a direct discharge and one that travels through groundwater, the Court provided a nonexclusive list of factors with the first two factors being of most important:

• Transit time
• Distance traveled
• Nature of the material through which the pollutant travels
• Extent to which the pollutant is diluted or chemically changed as it travels
• Amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source
• Manner by or area in which the pollutant enters the navigable waters
• Degree to which the pollution (at that point) has maintained its specific identity

The Court rejected arguments that its test would “vastly expand the scope of the statute, perhaps requiring permits for each of the 650,000 wells like petitioner’s or for each of the over 20 million septic systems used in many Americans’ homes.” Id. The Court reached its conclusion based in part on what it viewed as EPA’s long-standing practice of applying the Act’s “permitting provision to some (but not to all) discharges through groundwater for over 30 years.” Id. The Court noted specifically that EPA had asked the Ninth Circuit to apply a more limited “direct hydrological connection” test in the case but that the Ninth Circuit did not do so. Id. at *6.

EPA Follow-up

The County of Maui decision and the May 1, 2020 challenge to the New WOTUS Rule may force EPA to revisit how it should interpret the scope of the Clean Water Act.

First, EPA may issue guidance that further defines the functional equivalent test the Court developed. Cty. of Maui at *10. However, EPA might need to go through public comment periods and more formal rulemaking to resolve the conflicts between the County of Maui decision and the New WOTUS Rule. For example, the New WOTUS Rule excludes from coverage groundwater drained through subsurface drainage systems, groundwater recharge areas, and waste treatment systems. (See e.g., 85 Fed. Reg. 22250, 22278-79, 22317-18, 22324, April 21, 2020.) Without focusing on which groundwaters might be jurisdictional, County of Maui expanded the NPDES permit system so that it applies to a discharge through groundwater that is close enough to surface waters that it is functionally equivalent to a direct discharge. The New WOTUS Rule, in contrast, specifically excludes features like wastewater recycling ponds even “[t]hough these features are . . . often located in close proximity to tributaries or other larger bodies of water.” Id. at 22324 (emphasis added). Close proximity now must become a factor that EPA considers, rather than disregards.

Second, EPA must not only fill the gaps that County of Maui created, it will also need to defend the current litigation against the New WOTUS Rule, California v. Wheeler (No. 3:20-cv-03005, N.D. Cal.). On May 1, 2020, 17 states (California, New York, Connecticut, Illinois, Maine, Maryland, Michigan, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Washington and Wisconsin, the Commonwealths of Massachusetts and Virginia, the North Carolina) sued EPA alleging, among other things, that the New WOTUS Rule improperly excludes ephemeral streams and many wetlands. The complaint alleges that EPA discarded the “significant nexus” standard for determining waters of the United States” that was set forth in Justice Kennedy’s concurring opinion in Rapanos and relied instead on the plurality opinion in Rapanos which did not command a majority of the Court’s Justices. EPA’s New WOTUS Rule, however, may not likely be as easy to enjoin as Obama’s 2015 Rule because, unlike the Obama Rule, the New WOTUS Rule is designed to remain within the EPA’s statutory and constitutional authority whereas the 2015 Rule was successfully enjoined because it allegedly exceeded EPA’s jurisdiction.

The May 1, 2020 litigation also raises significant issues that may force the Northern District to attempt to harmonize County of Maui and the New WOTUS Rule. One significant issue will be the New WOTUS Rule’s failure to rely upon a 2015 scientific study, “Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence” (2015 Connectivity Report). The relevance of the 2015 report, however, may be low given the Court’s decision in County of Maui. The report had concluded that at a sufficiently large spatial and temporal scales, all waters and wetlands are connected. 85 Fed. Reg. at 22288. This expansive view that all waters and wetlands are connected appears inconsistent with the interpretation of the Clean Water Act’s regulatory scope under County of Maui and other Supreme Court precedent.

What’s Next – Litigation Outlook and Compliance Tips

The County of Maui decision opens the door to a new wave of Clean Water Act litigation to interpret and apply the new functional equivalent test, first, to the specific injection wells in the County of Maui and then extending to myriad other fact patterns to determine if a permit is required. Additional complexity arises when the multi-factor functional equivalent test is applied to groundwater pollution from accidental or unplanned events – like pipeline ruptures – or from surface impoundments. For example, an accidental event is at issue in Upstate Forever v. Kinder Morgan Energy Partners, L.P., 887 F.3d 637, 644 (4th Cir. 2018), where the Fourth Circuit concluded the Act applied to a pipeline rupture that seeped through groundwater over a distance of 1000 feet or less to navigable waters. Upstate Forever’s reliance on the direct hydrological connection test is abrogated by County of Maui, but now that the Court has remanded Upstate Forever it is not clear whether the functional equivalent test will yield a different result.

Also, surface impoundments for wastewater have historically triggered litigation. For example, in Kentucky Waterways All. v. Kentucky Utilities Co., 905 F.3d 925, 933 (6th Cir. 2018) abrogated by Cty. of Maui, Hawaii v. Hawaii Wildlife Fund, No. 18-260, 2020 WL 1941966 (U.S. Apr. 23, 2020), environmental groups were unsuccessful in arguing that coal ash impoundments were subject to Clean Water Act permitting because the Sixth Circuit found that groundwater was not a point source but only a “conveyance” that carries pollutants. The question the County of Maui decision triggers is whether plaintiffs will try to argue that impoundments of water are point sources.

Going forward, from a compliance perspective, it seems clear that any facility operating a wastewater impoundment will need to undertake at least a few evaluations to address the following questions.

• Where are the structures located?
• Do they discharge to navigable waters?
• Could the discharge to groundwater be construed to be from a point source?
• Does the discharges from groundwater to navigable waters require lengthy or short durations of time?
• How are the navigable waters impacted?
• Do dilution or mixing zone considerations apply to such discharges, particularly those to coastal waters?