On April 23rd, the U.S. Supreme Court issued a major ruling interpreting the breadth and scope of the Clean Water Act in County of Maui v. Hawaii Wildlife Fund.   The central issue was whether the Clean Water Act requires a permit when pollutants originate from a point source but are conveyed to navigable waters by a non-point source (in this case groundwater).  The Court ruled that a permit is required when such a discharge is the “functional equivalent of a direct discharge.”

Why is this decision noteworthy?

A source of ongoing debate over the scope of the Clean Water Act has been to what extent does the statute regulate discharges when they come into contact with groundwater?  The case at hand involved a wastewater treatment plant that discharges polluted water into the ground where it mixes with groundwater, which in turn, flows into a river or the ocean.  Does the wastewater treatment plant need a Clean Water Act permit?

Industry and the Trump Administration advocated for a narrow reading that “all releases of pollutant to groundwater” are excluded from the Clean Water Act (CWA) permitting program.  This would have resulted in a bright line test that a CWA permit is not required unless the point source directly discharges to a river, lake or the ocean.

Environmental groups argued that the 9th Circuit Court of Appeals got it right when it said a CWA permit is needed anytime a pollutant is “fairly traceable” to a point source discharge regardless of the time and distance the pollutant traveled before entering a navigable waterway.  Under the “fairly traceable” test, a CWA permit would be needed anytime a pollutant that enters a river, lake, or ocean could be traced back to a point source.

The Court found a middle ground with its “functional equivalent of a direct discharge” test.  The Court indicated that factors, which are discussed in more detail below, can used to determine whether a specific discharge triggers the need for a CWA permit.

In arguments before the Court, industry and the Trump Administration argued that anything other than the bight line test could lead to the requirement of CWA permits being required for 650,000 wells similar to Maui’s or the over 20 million+ septic systems used by homeowners.  As described in a Bloomberg article about the ruling, the reaction from some industry is that the ruling would be “devastating to industry.”

No doubt the ruling means more CWA permits will be required which means greater regulation of discharges to groundwater.  As discussed below, exactly how far the Court’s ruling extends will likely not be decided for years.

What are the factors that would determine whether a CWA Permit is needed for an indirect discharge?

The Court laid out several factors that lower courts can use to evaluate whether a specific discharge would trigger the need for a permit when there is an indirect discharge to a river, lake or ocean:

  1. Transit time
  2. Distance traveled
  3. Nature of material through which the pollutant travels
  4. Extent pollutant is diluted or chemically changed as it travels
  5. Amount of pollutants entering navigable waters (i.e. certain streams, rivers, lakes and oceans) relative to the amount of pollutants that leaves the point source
  6. The manner by or area in which pollutants enters navigable waters
  7. Degree to which the pollution (at that point) has maintained its specific identity

The Court indicated that the most important factors would be the time it takes for a pollutant to reach navigable waters and the distance traveled, but it provided very little clear guidance regarding the time and distance factors.

In its opinion the Court suggested that a distance of 50 miles from the point source before it reaches navigable waters may be too far to trigger a permit.  The Court also suggested that if pollution from a point source took 60 years to reach navigable waters, that would be too long.

Dissenting Justices Thomas, Gorsuch, and Alito criticized the majority for providing only vague guidance rather than a bright line test.  Questions remain as to how the factors will be applied.  For example, is 10 years, five years, one month, or one week too long to reach a navigable water?  Or, with regard to distance, what if the pollution has to travel five miles, one mile, or 300 yards?  Clarity on those questions won’t happen until there are additional lower court rulings regarding the “functional equivalent test.”

Why will this ruling will likely result in a lack of regulatory certainty and years of litigation?

In 2006, the Supreme Court issued Rapanos v. U.S. which is another landmark Clean Water Act decision.  In the Rapanos decision, Justice Kennedy established the “significant nexus test” to determine which streams and wetlands are regulated under the Clean Water Act.  Similar to the “functional equivalent” test, the “significant nexus test” was not a bright line test.  The “significant nexus test” significantly extended jurisdiction to streams and wetlands that were not adjacent to navigable waters if impacts to those streams or wetlands “affect the chemical, physical, and biological integrity of other covered waters understood as navigable.”

What ensued in the aftermath of Rapanos was years of litigation and two attempts by U.S. EPA to provide clarity through rulemaking to the “significant nexus test.”  Fourteen years later, the Trump Administration has enacted the latest rulemaking referred to as the “Navigable Waters Protection” rule. The Trump Administration rule will be challenged immediately as being inconsistent with the Clean Water Act and the Rapanos decision.

Similar to the aftermath of Rapanos, it is easy to see there will be years of litigation in the courts and efforts by U.S. EPA to define the “functional equivalent” test.

Why the ruling may not be good news for the Trump Administration’s environmental deregulatory agenda?

The Trump Administration has adopted a number of rules designed to reduce environmental regulation on industry.  Some of those recent rulemaking efforts were designed specifically to unwind Obama Administration environmental rules.

The Navigable Water Protection rule is one such example.  After signing Executive Orders early in the Administration, in 2020, the Trump Administration finalized the Navigable Water Protection rule which was designed to narrow federal jurisdiction over wetlands and streams.

A New York Times Article suggested that, as of end of 2019, there were 95 rules that the Trump Administration has targeted to reduce regulation of industry.  One may certainly find flaws with this analysis, but the Administration has been upfront that it believes there are too many environmental regulations on businesses.

In the County of Maui case, the Court noted that the Trump Administration had issued interpretative statement in 2019 that “all releases of pollutants to groundwater” are excluded from the permitting program.  Even though the Court noted that EPA guidance is entitled to deference, the Court ruled that EPA’s interpretative guidance results in a “loophole that defeats the statute’s basic purpose.”

Most noteworthy, two conservative Justices- Chief Justice Roberts and Justice Kavanaugh- sided with progressive Justices (Breyer, Ginsburg, Sotomayor and Kagan).  While Justice Kavanaugh in his concurring opinion suggests he was following Justice Scalia’s literal reading of the statutory language, he still disagrees with the position advocated by the Trump Administration before the Court that would have narrowly defined when a CWA permit is required.

There are multiple challenges to other Trump Administration rules working their way through the Courts.  The County of Maui case suggests a willingness by conservative justices to put some restraints on efforts to reduce federal environmental regulation.