Muddy waters: Who needs a discharge permit under the Clean Water Act?

By Joe C. Matteo and Willa B. Perlmutter

Have you ever wondered if polluted water that leaks from a settling pond into groundwater and eventually reaches a river is a “discrete” source of pollution? Or why it matters? You can likely envision a scenario where a mining operation has settling ponds that leak into groundwater before eventually entering a waterway. A recent Tenth Circuit Court of Appeals case, Stone v. High Mountain Mining, addressed this issue.

At a high level, the Clean Water Act (CWA) prohibits the discharge of pollutants into waterways from point sources unless operators have a National Pollutant Discharge Elimination System (NPDES) permit. Generally speaking, a point source is an object (such as a pipe, ditch, canal, etc.) from which pollutants are or may be discharged.

In Stone, private citizens and environmental groups sued High Mountain Mining for allegedly violating the CWA. At issue was the company’s Alma Placer gold mine in Colorado. The mine is very close to the town of Alma and directly next to the Middle Fork of the South Platte River.

The lawsuit claimed the mine’s settling ponds contained polluted water, which seeped through the bottoms and then entered the river. They claimed this amounted to a point source requiring an NPDES permit. Since the mine did not have one, they alleged it violated the CWA.

Under the law, polluters are strictly liable for unpermitted discharges, regardless of whether the polluter is at fault. That is important, because if you violate the CWA, you can face stiff civil fines (the lower court penalized High Mountain $500,000) and further oversight by federal and state authorities.

The CWA also allows for private citizens, in addition to governmental authorities, to bring enforcement lawsuits against violators. This enforcement mechanism creates an atmosphere that practically begs environmental groups to sue industry operators.

In County of Maui, Hawaii v. Hawaii Wildlife Fund, the U.S. Supreme Court addressed whether the CWA requires an NPDES permit when pollutants begin their journey to waterways from point sources, but then flow through non-point sources to reach a waterway. The Maui decision concluded that a NPDES permit is required “if the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from the point source.” Of course, understanding whether a discharge is “functionally equivalent” of a discharge from a point source is about as straightforward as it sounds – not very.

In Maui, the Supreme Court gave examples of where a permit is required and where its not. However, the court noted that there would be “middle ground” cases that would not fit nicely into either of the examples it gave. Therefore, the court said, those “middle ground” cases required the application of seven factors to determine whether a discharge is “functionally equivalent” to a direct discharge:

  1. transit time;
  2. transit distance;
  3. the nature of the material through which the pollutant travels;
  4. how much the pollutant is diluted or chemically changed as it travels;
  5. the amount of pollutant entering the waterway relative to the amount that leaves the point source;
  6. how and where the pollutant enters the waterway; and
  7. the degree to which the pollution (at that point) has maintained its specific identity.

The court noted that the first two factors, time and distance, are the most important in “most cases.” According to the Tenth Circuit, though, this list of factors from Maui is only “illustrative,” not “exhaustive.”

In Stone, the lower court determined that the first three factors supported the position advanced by the plaintiffs. It also decided that the remaining factors carried no weight since there was limited evidence that they supported the mine’s position. Accordingly, the lower court ruled in favor of the private citizens and environmental groups.

The Tenth Circuit called Stone one of those “middle ground” cases that the Maui decision warned of. In its review, the Tenth Circuit determined the lower court made a mistake by ending its analysis without reaching the last four factors. It noted that the lower court’s decision was based on a “thin” record and analysis. After recognizing the extensive presence of mining in Colorado, the Tenth Circuit sent the case back to the lower court for a more comprehensive and rigorous application of the Maui factors.

It will be worth watching to see what the lower court concludes when it reviews the factors more thoroughly. For now, though, there are two takeaways to consider. First, at least in the Tenth Circuit, litigants should take care to address all the Maui factors in similar cases. Second, despite the Supreme Court’s direction in Maui that the first two factors should be given more weight, this does not mean that they will necessarily override the next five factors.

As time goes on, there will likely be more judicial discussion on whether this kind of settling pond requires a CWA permit. In the meantime, it would be wise to apply a complete analysis of all the factors to the specific circumstance you find yourself in.

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