Clean Water Act Liability for Groundwater Contamination

In just the past year, litigation related to the groundwater conduit theory has generated diverging opinions from numerous federal courts, leaving businesses uncertain regarding their potential liability.

A recent wave of citizen suits filed under the federal Clean Water Act has targeted various industries, relying on what has been termed the "groundwater conduit" or "hydrological connection" theory of liability. Under this theory, the discharge of pollutants to groundwater is actionable under the CWA if the pollutants ultimately migrate to the waters of the United States. If viable, the theory expands liability under the CWA and has the potential to affect industries throughout the country. In just the past year, litigation related to the groundwater conduit theory has generated diverging opinions from numerous federal courts, leaving businesses uncertain regarding their potential liability.

On Sept. 24, 2018, the United States Court of Appeals for the Sixth Circuit became the latest appellate court to weigh-in on this significant and evolving area of law. The Sixth Circuit expressly rejected the groundwater conduit theory and created a circuit split – with the Ninth Circuit and the Fourth Circuit appeals courts previously issuing decisions upholding the theory. Thus, the issue is now ripe for Supreme Court review. Until then, practitioners and businesses must be cognizant of whether their jurisdiction applies the groundwater conduit theory.   

Congress enacted the CWA "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters."  33 U.S.C. § 1221(a). The CWA provides that the "discharge of any pollutant by any person shall be unlawful," unless authorized by a permit under the National Pollutant Discharge Elimination System (“NPDES”). 33 U.S.C. §§ 1311(a), 1342. A "discharge" is "any addition of any pollutant to navigable waters (i.e., waters of the United States) from any point source." 33 U.S.C. § 1362(12). A "point source" is "any discernible, confined and discrete conveyance . . . from which pollutants are or may be discharged."  Id. at § 1362(14). Courts have consistently restated the elements of a CWA violation as: "(1) discharge[ing]; (2) a pollutant (3) into navigable waters (4) from a point source (5) without a [NPDES] permit." Sierra Club v. El Paso Gold Mines, Inc., 421 F.3d 1133, 1142 (10th Cir. 2005).

Courts generally agree that the CWA does not regulate discharges to groundwater. See Rice v. Harken Expl. Co., 250 F.3d 264, 269 (5th Cir. 2001). Courts have wrestled, however, with whether the CWA regulates discharges to groundwater that is hydrologically connected to navigable waters. Under the groundwater conduit theory, if there is a close hydrologic connection between groundwater and a navigable water, then the discharge of a pollutant from a point source through the hydrologically connected groundwater to a navigable water should constitute the addition of a pollutant to a navigable water from a point source. In other words, if viable, the groundwater conduit theory would establish CWA liability even in the absence of a discharge from a point source directly into navigable waters.

The Circuit Spilt
The groundwater conduit theory has generated conflicting opinions. The Ninth Circuit recently issued a decision following the groundwater conduit theory. See Hawai’i Wildlife Fund v. Cty. of Maui, 886 F.3d 737, 749 (9th Cir. 2018). In Maui, the County of Maui owned and operated a wastewater treatment facility where it was injecting sanitary wastewater into underground wells that discharged to groundwater which ultimately flowed to the Pacific Ocean.  A suit was filed under the ground water conduit theory. The Ninth Circuit held that the discharges were regulated under the CWA because "the pollutants are fairly traceable from the point source to a navigable water such that the discharge is the functional equivalent of a discharge into the navigable water." Id.

In April 2018, the Fourth Circuit also adopted the groundwater conduit theory, finding that the CWA covered discharges to groundwater with a "direct hydrological connection" to navigable waters. See Upstate Forever v. Kinder Morgan Energy Partners, L.P., 887 F.3d 637, 651 (4th Cir. 2018). In Upstate Forever, approximately 369,000 gallons of gasoline accidentally spilled from an underground pipeline. A suit was filed alleging that gasoline was moving through groundwater to navigable waters. The court held that the CWA regulates pollutants discharged from a point source, here, a ruptured pipeline, that reach navigable waters, so long as the discharges are "sufficiently connected to navigable waters" and "the connection between point source and navigable waters" is "clear." Id. at 651.

However, even within the Fourth Circuit the potential scope of liability under the groundwater conduit theory is unclear because after its decision in Upstate Forever, the Fourth Circuit subsequently issued a decision in Sierra Club v. Virginia Elec. & Power Co., 2018 WL 4343513 (4th Cir. Sept. 12, 2018), that substantially narrowed application of the theory. In Sierra Club, the court affirmed in part and reversed in part a district court finding that Virginia Electric was liable for discharges to navigable waters through groundwater from a coal ash landfill and settling ponds. Notably, Virginia Electric had not challenged the district court's finding that there was a direct hydrological connection to the navigable waters through groundwater, and the Fourth Circuit accepted that, based on Upstate Forever, such a connection was sufficient to potentially establish liability under the CWA. See id. at *4. However, the Fourth Circuit reversed the lower court's finding of CWA liability on a different basis, concluding that the CWA requires a discharge from a "point source" – defined as a "discernible, confined and discrete conveyance," and that as so defined, a settling pond is not a device for conveyance, and hence not a "point source." Id. at *5. In so holding, the Fourth Circuit distinguished between the gradual leaching of contamination to groundwater through a settling pond from the direct discharge to groundwater resulting from a discrete conveyance like a ruptured pipe. Thus, even within the Fourth Circuit, there is substantial uncertainty as to when CWA liability might attach under the groundwater conduit theory.

Most recently, in a pair of opinions, the Sixth Circuit added to the uncertainty by rejecting outright the groundwater conduit theory. See Tennessee Clean Water Network v. Tennessee Valley Authority, 2018 WL 4559103, at *5 (6th Cir. Sept. 24, 2018); Kentucky Waterways Alliance v. Kentucky Utilities Company, 2018 WL 4559315 at *5 (6th Cir. Sept. 24, 2018) (further ruling that ash ponds are not "point sources" under the CWA). Both of those cases involved coal-fired power plants that disposed of coal ash waste through the use of a "sluice" system that combined the ash with water and conveyed the mixture through a series of pipes to man-made ponds that eventually discharged to navigable waters. The Sixth Circuit focused on a provision in the CWA concerning "effluent limitations" which controls the amount of pollutants that may be discharged "from point sources into navigable waters." See Kentucky Waterways, 2018 WL 4559315 at *7. The court observed that the term "into" "indicates directness . . . .  Thus, for a point source to discharge into navigable waters, it must dump directly into those navigable waters." Id. Because the pollutants at issue were not discharged directly into navigable waters, the court concluded that the defendants were not liable under the CWA even though their discharges ultimately migrated to navigable waters through the groundwater. These decisions seemingly are in direct conflict with the Ninth Circuit's decision in Maui and may, or may not, be reconcilable with the Fourth Circuit's finely parsed opinions in Upstate Forever and Sierra Club.

The issue is now ripe for Supreme Court review. In fact, a certiorari petition had been filed with the Supreme Court for review of the Ninth Circuit's Maui decision. A petition was also filed challenging the Fourth Circuit's decision in Upstate Forever. Until the issue is resolved, practitioners and the regulated community should be aware of whether their particular jurisdiction may apply the groundwater conduit theory. Depending on the jurisdiction, there can be very different CWA permit requirements placed on the same types of businesses for the same kinds of discharges. This is a critical issue for companies whose operations can result in discharges to groundwater through spills, accidental discharges, and seepage from retention ponds. Under the groundwater conduit theory, these discharges are subject to regulation under the CWA when pollutants migrate through groundwater to navigable waters. Therefore, businesses should consider whether they are discharging to groundwater that is hydrologically connected to navigable waters.

The potential impact of the groundwater conduit theory cannot be overstated. These newly defined "discharges" would be difficult to anticipate -- and seek permit coverage for -- because groundwater pathways to navigable waters may only be discernible after the fact. Spilling or leaking materials conveyed by groundwater or subsurface flow to navigable waters may suddenly require NPDES permits. In addition, adopting this theory would potentially impact the settlement of CWA suits. Plainly, the groundwater conduit theory increases the potential for successful CWA citizen suits, which generally provide environmental groups with a more straightforward route to establishing liability, and therefore shifts the leverage to plaintiffs in settlement negotiations that almost always resolve these disputes, given the fee-shifting provisions available to successful plaintiffs.

Pete Jamison is an associate at Archer. The law firm's principal office is located in Haddonfield, N.J., a historic community less than 10 miles from downtown Philadelphia. The firm also has offices in Princeton, Flemington, Red Bank, and Hackensack, N.J.; Philadelphia; Wilmington, Del.; and New York.

David Edelstein is a partner at Archer and a member of the firm's litigation department. He can be reached at 856-354-3125 or [email protected].

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