Editor’s note: Interested in aligning with other North Carolina job creators to shape a top-10 business legal climate here in our state? Contact NC Chamber Legal Institute President Ray Starling to learn what you stand to gain from your engagement and support.

A number of high-profile court cases are currently attracting attention from media outlets and others across North Carolina. Case in point: Ongoing developments in the decades-old Leandro case that continues to shape conversations around education policy in our state. While we certainly have our eye on these prominent cases here at the NC Chamber Legal Institute (CLI) – and will explore several of them in upcoming editions of Legal Sidebar – I also like to feature cases in this newsletter that don’t receive this same level of coverage and yet hold the potential to vastly influence how business gets done in North Carolina.

One such case decided last year by the U.S. Supreme Court, County of Maui v. Hawaii Wildlife Fund, joins prior cases such as Rapanos v. U.S. Army Corps of Engineers in probing the meaning and intent of terms that have appeared in the landmark Clean Water Act for nearly fifty years. Passed by Congress all the way back in 1972, this act remains the principal federal law governing water pollution and related issues across the United States; and yet, America’s lawyers and armchair lawyers continue to debate its terms both within and beyond official legal venues.

In the Rapanos case, the term at issue was “navigable waters.” In Maui, the courts instead had to consider whether a discharge to navigable waters had taken place. As in Rapanos, the final opinion used language that was just imprecise enough to create new uncertainty for landowners, manufacturers, farmers, and local governments in North Carolina and elsewhere in the U.S.

County of Maui v. Hawaii Wildlife Fund

The facts in Maui involved the operation of four injection wells used to dispose of wastewater from a treatment plant operated by the County of Maui in the State of Hawaii. The wells injected treated wastewater into the groundwater on the island of Maui at a point approximately one half-mile from the shoreline. The Hawaii Wildlife Fund initiated a citizen suit alleging the County failed to obtain a permit under Section 402 of the Clean Water Act, which requires a National Pollution Discharge Elimination System (NPDES) permit for discharges of pollutants that flow through a point source into navigable waters. The act defines a “point source” as a discernable, confined, and discrete conveyance, such as a pipe, ditch, or similar channel.

The various courts involved in Maui had no difficulty conjuring a point source, as the injection wells used a pipe to convey the wastewater, which unquestionably contained pollutants. “Navigable waters” was also unproblematic as a term, as the Pacific Ocean is most certainly navigable. But did the movement of wastewater one-half mile through groundwater constitute a point source discharge of pollutants into navigable waters?

This was the critical question, and the Hawaii District Court that first took up the case agreed with the Wildlife Fund that it did. In a summary judgment, the District Court concluded that the discharge of pollutants through groundwater was “functionally” a discharge into navigable waters since wastewater components ultimately reached the Pacific Ocean – despite the fact that the phrase “functional discharge” does not appear in the Clean Water Act or in any rules promulgated by the EPA.

The Ninth Circuit, in upholding the ruling of the District Court, decided that Congress must have intended that even if a point source did not directly discharge to navigable waters, a permit was nevertheless required if the pollutants that were discharged were “fairly traceable from the point source to a navigable water.”

The Supreme Court’s Interpretation

The matter then moved to the Supreme Court, where a 6-3 decision agreed with the defendant, the County of Maui, that a summary judgment requiring an NPDES permit may have been an overreach. The opinion labored over the meaning of the word “from” in the Clean Water Act, in the phrase “…addition of any pollutant to navigable waters from any point source,” determining that the “fairly traceable” test was overbroad. The majority instead adopted the following test: A discharge of pollutant is subject to NPDES permitting requirements when it goes directly from a point source to navigable water or when it is the functional equivalent of a direct discharge. In January 2021, after the Court had rendered its judgment, the EPA issued a guidance memorandum for applying its conditions.

The Court’s opinion contained a list of factors that could be used to determine functional equivalency, including transit time to navigable waters, distance to navigable waters, the amount of pollutant reaching navigable waters compared to the amount leaving the point source, and the degree of dilution or chemical changes that occur during transit. The Supreme Court’s opinion apparently intended functional equivalency to be determined by how similar a discharge is to a direct discharge, but the Court also advised that functional equivalency should be interpreted to advance the statutory purposes that Congress sought to achieve in the language of the Clean Water Act.

The Court’s decision remanded Maui back to the Hawaii District Court, which promptly reinstated its original judgment that a permit was required in the matter. However, the Supreme Court’s standard remained the law of the land and – after the EPA’s September 2021 decision to rescind its earlier guidance – the Court’s ruling itself provides the only guiding principles determining when a discharge requires a permit in similar instances.

What does the Maui case ultimately mean for NC Chamber members and others across North Carolina’s business community?

For one thing, expect similar decisions related to water permitting to play out on a case-by-case basis, at least until the EPA issues new guidance. Therefore, if you or your business operate a septic tank near a river or on a barrier island, you may have a new NPDES permit in your future. Farmers and agriculture facilities, unfortunately, should prepare for yet more regulation, permitting, and enforcement, as concentrated animal feedlots are included – with no pipe required – in the definition of a point source. (If nitrate levels are elevated in nearby streams, would those facts pass the functional equivalency test?)

Decisions like these may thrill a few of the lawyers who will be arguing these factors far into the future, as courts continue to divine the intent of congressional authors from half a century ago. But you can count me among those who prefer a bit more certainty for job creators along with their legal decisions.

Sincerely,

Ray Starling
President
NC Chamber Legal Institute