Environmentalists Eye Power Plants After Supreme Court Ruling

The Supreme Court’s embrace of a new standard for federal water permitting puts a bull’s-eye on power plant waste sites, environmentalists say.

The high court on Thursday ruled that water pollution that takes an indirect route from a discrete source to a federally regulated waterway needs a Clean Water Act permit when it’s the “functional equivalent” of a direct discharge.

The justices rejected arguments from the Trump administration and industry lawyers that such indirect pollution falls beyond the scope of the federal permitting program, concluding in a 6-3 opinion that the approach would open a huge loophole in the law.

While the case focused on a wastewater plant in Maui County, Hawaii, the decision will have ripple effects for other pollution sources, especially the power sector.

The same Clean Water Act debate—whether permits are needed for indirect pollution—has arisen repeatedly in litigation over contamination from coal ash impoundments.

Coal ash, the waste produced from coal-fired power plants, contains metals such as arsenic, chromium, and mercury that pose risks to public health and the environment.

“By reaffirming these longstanding Clean Water Act protections, the Supreme Court has made clear that for hundreds of these old polluting sites around the country, they need to clean up their act,” Chicago-based Earthjustice attorney Thomas Cmar told Bloomberg Law.

‘Poster Child’

The Supreme Court majority laid out a multifactor test for figuring out what types of pollution fall under the “functional equivalent” test: the time and distance it takes a pollutant to reach a federal waterway; the type of material it traverses; the extent of dilution; and more.

That means the writing’s on the wall for coal ash sites where contaminants can move through groundwater and end up in adjacent rivers and lakes, said Harvard Law School professor Richard Lazarus.

Power companies previously contended the pollution’s route through groundwater made the Clean Water Act’s permitting program inapplicable, he said, but the Supreme Court ruling “completely rejects” that argument and lower court decisions that embraced it.

Cmar, who has litigated multiple coal ash cases, noted that his group has an appeal on hold that focuses on alleged pollution from an old Dynegy Inc. plant on the Middle Fork of the Vermilion River in Illinois.

A district court rejected an environmental coalition’s Clean Water Act claims, and the U.S. Court of Appeals for the Seventh Circuit put the subsequent appeal on hold pending the Supreme Court’s decision in the related Maui case.

Now Earthjustice plans to ask the Seventh Circuit to remand the case to district court and allow the environmental groups to pursue their Clean Water Act claims.

“It’s in many ways a poster child for the importance of this legal theory being preserved by the Supreme Court,” Cmar said, noting that the Dynegy plant is right on the banks of the river.

The American Public Power Association, which represents community-owned electric utilities, said it’s still reviewing the ruling with its members. Edison Electric Institute, which represents investor-owned utilities, couldn’t immediately provide comment Friday.

Crowell & Moring LLP attorney David Chung, who represented those groups and others in amicus briefs in the Maui litigation, said the Supreme Court decision doesn’t resolve debate over whether coal ash sites need Clean Water Act permits.

“There’s going to be a line of argument that the defendants in those cases would want to pursue” to demonstrate that their sites don’t fit the factors the Supreme Court opinion lays out, Chung said.

Other Cases

The Illinois case is just one of several water permitting lawsuits focused on coal ash impoundments in recent years.

The U.S. Court of Appeals for the Sixth Circuit sided with power plant operators on Clean Water Act claims against sites in Kentucky and Tennessee, and the U.S. Court of Appeals for the Fourth Circuit did the same in a Virginia case.

Parties can’t relitigate cases that have already been resolved, but they can file new claims if pollution is ongoing.

Cmar said his clients don’t plan to raise new Clean Water Act claims in the Kentucky case because they’re busy pursuing separate Resource Conservation and Recovery Act arguments.

The Tennessee and Virginia sites also won’t see new claims because the challengers were able to secure out-of-court settlements or legislative action to secure cleanup commitments, said the Southern Environmental Law Center, which represented plaintiffs in both cases.

But Cmar said “probably dozens” of other problematic sites exist across the country. SELC lawyer Frank Holleman pointed to sites in Alabama, Georgia, and elsewhere.

“It’s possible that future action might be brought by us or others for violations of the Clean Water Act at other coal ash sites,” he said.

‘Fact-Specific’

Carlton Fields attorney Neal McAliley said that courts will have to analyze the specific circumstances of future cases to decide what’s covered under the functional equivalent test.

“That is a fact-specific determination that will be sorted out in future cases,” the Miami-based lawyer said. “But the mere fact that a discharge travels from a facility to the navigable waters in part through groundwater is no longer a complete defense.”

Hanson Bridgett attorney Davina Pujari said “it’s not a legal analysis alone. It requires this integration of law and science and technology.”

And lawyers for power plants still have other arguments available, Chung said, including their contention that pollution from coal ash impoundments doesn’t qualify as “point source” pollution, another threshold for Clean Water Act permitting.

In the Fourth Circuit case involving a Dominion Energy coal ash site in Virginia, for example, the court concluded the site’s landfill and settling ponds didn’t qualify as point sources and tossed the Clean Water Act claims on those grounds.

Cmar, however, said that other courts have said impoundments are point sources, “and we expect that we will be able to prevail on this issue in future cases.”

—With assistance from Amena H. Saiyid.