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SCOTUS Maui Ruling Ripples Through Pipeline, Power Plant Cases

July 2, 2020, 5:38 PM

The U.S. Supreme Court’s recent ruling that some indirect water pollution requires federal permits triggered renewed debate this week in legal battles over power plants and pipelines.

In an Illinois case, environmentalists argued Wednesday that the high court’s pivotal Clean Water Act decision in County of Maui v. Hawai’i Wildlife Fund means their own claims about coal ash pollution should advance. On the East Coast, meanwhile, industry lawyers sparred with environmental lawyers over whether the Maui standard applies in their pipeline rupture case.

The disagreements highlight the broad but unsettled implications of the Supreme Court’s April ruling, which said indirect water pollution triggers the Clean Water Act’s requirements when it’s the “functional equivalent” of a direct discharge.

The Prairie Rivers Network, a conservation group in Illinois, says the decision requires the U.S. Court of Appeals for the Seventh Circuit to revive the group’s case against Dynegy Midwest Generation for alleged pollution from coal ash ponds at the company’s retired Vermilion Power Station.

Coal Ash Near River

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. Dynegy’s unlined impoundments are on the banks of the Middle Fork of the Vermilion River.

A district court tossed the Prairie Rivers Network’s claims in 2018. The group argued in a new brief that the Supreme Court’s ruling is controlling precedent and requires the Seventh Circuit to reverse the district court’s “erroneous holding.”

“The Supreme Court has now definitively resolved this question in the opposite direction, holding that point source discharges through groundwater to nearby surface waters are subject to Clean Water Act jurisdiction if they are the functional equivalent of direct discharges to surface water,” they told the court.

Dynegy has until July 31 to respond. The company previewed its counterargument in a legal filing in May, saying the Supreme Court’s decision applies to areas where a regulatory gap exists. They say that isn’t the case for the Vermilion coal ash ponds because state laws and the federal Resource Conservation and Recovery Act govern the site.

Pipeline Spill

The debate over the impact of the Supreme Court’s decision is even more complicated in the U.S. Court of Appeals for the Fourth Circuit, which is handling a case involving a gasoline pipeline spill in South Carolina.

Kinder Morgan’s Plantation pipeline ruptured in 2014 and spilled gasoline on the ground and into tributaries of the Savannah River. The Fourth Circuit previously agreed with Upstate Forever and other environmental groups that the discharges violated the Clean Water Act because polluted groundwaters had a “direct hydrologic connection” with federally regulated waterways.

Kinder Morgan asked the Supreme Court to review the ruling. The justices kept the case on hold during proceedings in the Maui litigation, and then sent it back to the Fourth Circuit in May for the judges to revisit in light of the new “functional equivalent” test.

Environmental groups argued Wednesday that Kinder Morgan’s pipeline rupture still qualifies as a Clean Water Act violation under the high court’s standard.

“While the Supreme Court articulated the applicable standard differently, in substance it affirmed this Court’s decision finding that the unpermitted discharge by Kinder Morgan of petroleum pollutants into waters of the United States violates the Clean Water Act,” they told the Fourth Circuit.

The groups reasoned that the spilled gasoline travels from the pipeline into groundwater and into nearby federal waterways, meeting the Supreme Court’s test.

Time and Distance of Pollution

Justice Stephen Breyer, who wrote the majority opinion, said the time and distance it takes for pollution to reach federal waters were key factors in analyzing whether the Clean Water Act applies.

The Plantation pipeline lies just 1,000 feet from one Savannah River tributary and 400 feet from another, the groups told the Fourth Circuit. And petroleum pollution was detected in the waters a month after the pipeline spill was discovered, they said.

But Kinder Morgan lawyers said the environmentalists didn’t make those detailed arguments in their original district court lawsuit, so the Fourth Circuit should scrap their claims. Or, they argued, the circuit court should remand the case for further briefing in the district court in light of Maui.

“Such an alternative approach would permit the district court (and other courts) to apply County of Maui in the first instance and, if an appeal occurs later, would permit more development of the law before this Court must assess it,” Kinder Morgan said.

The cases are Prairie Rivers Network v. Dynegy Midwest Generation, 7th Cir., No. 18-3644, brief filed 7/1/20 and Kinder Morgan Energy Partners LP v. Upstate Forever, 4th Cir., No. 17-1640, briefs filed 7/1/20.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergindustry.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergindustry.com; Anna Yukhananov at ayukhananov@bloombergindustry.com

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