Sixth Circuit rules in two cases that discharges to groundwater from coal ash ponds do not require a Clean Water Act Permit

By Maggie Macdonald and Private:

The Sixth Circuit’s recent decisions in Kentucky Waterways Alliance et al v. Kentucky Utilities Co., (“Kentucky Utilities”) No. 18-5115 (6th Cir. Sept. 24, 2018), and Tennessee Clean Water Network v. Tennessee Valley Authority (“TVA”) No. 17-6155 (6th Cir. Sept. 24, 2018), have further widened an existing circuit split regarding EPA’s Clean Water Act (the “Act”) jurisdiction over discharges of pollutants that travel through  groundwater to surface water.  As a general rule, discharges to groundwater are not regulated under the Act, which requires a permit for discharges of a pollutant from a point source to navigable waters (which do not include groundwater).  However, some courts have adopted a “groundwater conduit theory,” also known as a “hydrological connection theory,” to find that discharges to groundwater require permits where there is a clear connection between the receiving groundwater and a navigable water. This issue could have far-reaching consequences for many industries, contributing to the regulatory uncertainty about whether settling ponds, pipeline spills, injectional wells, and agricultural runoff, among others, require permits under the Act.

In both Kentucky Utilities and TVA, environmental groups alleged that pollutants leaching from coal ash ponds at power plants migrated through groundwater to navigable waters and therefore required permits under the Clean Water Act. In Kentucky Utilities, plaintiffs argued that the groundwater was a point source requiring a permit under the Act, and alternatively that under the “hydrological connection” theory, the ash ponds were polluting the groundwater that flowed into a nearby lake. In TVA, plaintiffs made similar arguments about ash ponds leaching through groundwater to a river. The Sixth Circuit rejected these arguments in both instances. Based on its analysis of the language and purpose of the Act, the Sixth Circuit held that “reading the Clean Water Act to cover groundwater pollution like that at issue in this case would upend the existing regulatory framework.”

The Sixth Circuit’s holdings expressly rejected recent decisions in the Fourth and Ninth Circuits, both of which . In Hawai’i Wildlife Fund v. County of Maui, 886 F.3d 737 (9th Cir. 2018), the County of Maui’s wastewater facility discharged into groundwater via four injection wells.  Plaintiffs relied on a dye tracer test to demonstrate that the wastewater reached the Pacific Ocean, and the Ninth Circuit found that the discharges required a Clean Water Act permit.  The Fourth Circuit, in Upstate Forever v. Kinder Morgan Energy Partners, 887 F.3d 637 (4th Cir. 2018), similarly found that pollution from a pipeline spill discharging several thousand gallons of gasoline to groundwater that eventually reached navigable waters, required a permit. The spill had been contained and a government-approved cleanup was ongoing.  The Fourth Circuit noted that the hydrological connection must be clear in order for Clean Water Act permitting requirements to apply, and fact-specific analyses of geology, flow, slope, time, and distance from the discharge point to the navigable waterway may be relevant in making such a determination.

One key difference between the recent Sixth Circuit Cases and the Fourth and Ninth Circuit cases lies in the nature of the original discharge’s conveyance.  The Sixth Circuit cases involved settling ponds that produce diffuse discharges and are not typically considered “point sources,” whereas the pipeline break in the Kinder Morgan case and the injection wells in the County of Maui case both involve conveyances more readily identifiable as “point sources.”  Following that logic, the Fourth Circuit more recently concluded that a discharge of arsenic to groundwater through a closed coal ash landfill is not a point source requiring a permit.  Sierra Club v. Va. Elec. & Power Co., No. 17-1952,_ F.3d _, 2018 WL 434513 (4th Cir. Sept. 12, 2018).  In addition to focusing on the conveyance mechanism for the original discharge, the Fourth Circuit also examined the characteristics of the discharge to groundwater, and noted that the Clean Water Act is designed to regulate the measurable discharge of pollutants, which it found was impossible with a diffuse discharge to groundwater like that from a closed landfill.

Proponents of the groundwater conduit theory note that without liability for indirect discharges, facilities can escape Clean Water Act liability by setting up settling ponds close to a navigable waterway, which allow pollutants to travel through groundwater to navigable waters without triggering permitting requirements.  Environmental groups will likely continue to bring litigation under the Act seeking to expand the application of the groundwater conduit theory.

In the meantime, the EPA is currently reviewing approximately 60,000 comments received in response to its February 2018 request for comments on whether EPA should institute a rulemaking clarifying whether discharges through groundwater to navigable waters fall under the Clean Water Act. (Our prior blog discussing the EPA request for comments and the Fourth and Ninth Circuit cases can be found here.)

The current circuit split highlights a significant source of regulatory uncertainty, as dischargers could potentially be subject to different permitting requirements in different jurisdictions.  Dischargers should keep abreast of the standard applied in their jurisdiction, and be aware that fines under the Act accrue daily, and can exceed $53,000 per violation per day.  Municipalities, states, Superfund cleanup sites, energy companies, golf courses, recreation areas, agriculture, recreation areas, agriculture, manufacturers, businesses that contain stormwater onsite in unlined ponds, cesspools, septic systems, underground storage tanks, surface impoundments, landfills, and pipelines–all potentially may fall under the CWA if groundwater carries a discharge from them to navigable waters.    Notably, these two recent Sixth Circuit decisions further split the circuits and increase the likelihood that the U.S. Supreme Court will review this issue and provide guidance applicable nationwide.