U.S. Supreme Court Decides Two Important Environmental Cases
Washington (4/27/2020) – Last week, the U.S. Supreme Court issued important decisions in two high-profile environmental cases. Both addressed the balance between federal and state authority. The first practically limits state tort actions related to Superfund sites, and the second expands the Clean Water Act’s permitting requirements to groundwater discharges.
In Atlantic Richfield Co. v. Christian, No. 17-1498, 590 U.S. ____ (U.S. Sup. Ct. April 20, 2020) (“ARCO”), the Court held that state tort claimants who are themselves liable under the Superfund law (a/k/a CERCLA) can still pursue their tort claims against another CERCLA liable party so long as the remedy is limited to money damages. But, those same state tort claimants cannot obtain relief in the form of a specific restoration plan or damages to fund such a plan unless EPA has approved that plan.
This case arose out of a dispute involving the Anaconda Smelter Superfund Site near Butte, Montana. ARCO, the current owner of the former smelter property, has performed major remediation work at the site under EPA’s oversight for many years, and remedial work is expected to continue at least through 2025. Despite ARCO’s efforts, 98 Montanans who own properties within the Superfund site boundary sued ARCO in state court for trespass, nuisance, and strict liability. They asked the state court to require ARCO to fund a $50+ million trust to pay for the plaintiffs’ proposed restoration plan, which would require remediation beyond what EPA approved under its CERCLA authority.
ARCO brought two broad challenges to the plaintiffs’ tort claims. First, ARCO argued that the federal courts had exclusive jurisdiction over the plaintiffs’ claims under CERCLA § 113(b), 42 U.S.C. § 9613(b). The Court rejected that argument because plaintiffs’ claims were traditional state law claims that did not arise under CERCLA. Second, ARCO argued that CERCLA prohibited the plaintiffs from implementing their restoration plan without EPA approval. The Court agreed that the plaintiffs were all current owners of property within the Superfund site and so were “potentially covered parties” or “PRPs” under CERCLA § 107(a), 42 U.S.C. § 9607(a). As PRPs, the plaintiffs are prohibited by CERCLA § 122(e)(6) from taking remedial action at the site without EPA’s authorization because another PRP, i.e., ARCO, has already begun a remedial investigation and feasibility study pursuant to an administrative order or consent decree. 42 U.S.C. § 9622(e)(6).
While the ARCO decision formally allows plaintiffs to continue pursuing their tort claims in state court, the practical effect is to make any significant recovery on the tort claims more difficult. With restoration damages effectively barred by CERCLA, plaintiffs will have to rely on damage theories that are much more difficult to prove and subject to stricter statutes of limitations. Overall, the decision affirms the primacy of federal authority at Superfund sites and substantially limits the ability of landowners within Superfund site boundaries to recover under state law theories.
In County of Maui, Hawaii v. Hawaii Wildlife Fund et al., No. 18-260, 590 U.S. ____ (U.S. Sup. Ct. April 23, 2020), the Court held that the Clean Water Act (CWA) prohibits a discharge of pollutants to navigable waters without a permit when such a discharge is either a direct discharge into the navigable water or the “functional equivalent of a direct discharge.” The Court drew no bright lines and provided only general guidance on when a discharge is the “functional equivalent” of a direct discharge to navigable waters. Maui operated a wastewater reclamation facility that collects sewage, partially treats it, and pumps four (4) million gallons of treated water hundreds of feet underground. The treated water then travels a half mile through groundwater into the Pacific Ocean. Environmental groups brought suit claiming that this was a discharge of pollution into navigable waters without a permit. The question presented by this case was whether the CWA requires a permit when pollutants originate from a point source (any conveyance such as a pipe, ditch, well, etc.) but are conveyed to navigable waters by a nonpoint source, such as groundwater.
The environmental groups argued, and the Ninth Circuit held, that the discharge was subject to the CWA as long as the pollution was “fairly traceable” to a point source, no matter how far it traveled to navigable waters. Maui argued for a bright-line test, arguing that the CWA only applied if the pollutant was conveyed directly to navigable waters by a point source. Maui and the U.S. Solicitor General argued that if any nonpoint source, such as groundwater, lies between the point source and the navigable waters, the CWA does not apply. EPA recently issued guidance along the same lines.
The Court rejected both views as “too extreme.” The Court noted that in enacting the CWA, the Congress made a conscious decision to leave regulation of groundwater pollution to the states. However, the Court also decided that Congress did not intend to create a “large and obvious loophole” by allowing polluters to escape permitting requirements by discharging pollution to groundwater that is perhaps only a short distance from an ocean or a river.
The Court held that the CWA 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.” In other words, the CWA regulates additions of pollutants when “a point source directly deposits pollutants into navigable waters, or when the discharge reaches the same result through roughly similar means.” The Court gave only general guidance on how this will be applied in practical terms. Where a pipe ends a few feet from navigable waters and it emits pollutants that travel a few feet through groundwater, a permit is required. However, if the pipe ends 50 miles from navigable waters and the pollutants travel with groundwater, mix with other material, and end up in navigable waters many years later, the permitting requirements “likely do not apply.”
The Court freely admitted that it is drawing no bright line, but provided some factors that “may prove relevant (depending upon the circumstances of a particular case).” The two most important factors will usually be transit time and distance traveled. Other factors include 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 pollution entering the navigable waters relative to the amount leaving the point source, the manner by or area in which the pollutant enters the navigable waters, and the degree to which the pollution maintains its specific identity. The Court indicated that lower courts can further refine these standards as they decided cases, and that EPA can provide administrative guidance. In fact, the Court did not decide whether the CWA required Maui to obtain a permit for its discharges. Rather, it remanded the case for the lower courts to apply the new functional equivalent test to the facts.
The dissenting justices argued for a bright-line rule whereby the CWA requires a permit only when a point source discharges pollutants directly into navigable waters. They were critical of the “functional equivalent” test as arbitrary, nebulous, and difficult to apply.
Environmental groups are touting this case as a major victory and will likely use it as a springboard for new lawsuits against any industries whose discharges are reaching groundwater and who are not permitted under the CWA. Regulators will reconsider their permitting and enforcement practices under the County of Maui case. Any industries whose discharges are reaching groundwater should carefully consider this case and determine how it affects them. Early action could substantially reduce the risk of lawsuits and enforcement actions.
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