Maui has finally made its way to Colorado. In what appears to be the first application of County of Maui v. Hawaii Wildlife Fund, 140 S. Ct. 1462 (2020) in the state, the District of Colorado recently held that certain discharges to groundwater were subject to the Clean Water Act (CWA) and required a discharge permit. With the decision in Stone v. High Mountain Mining Company, LLC, No. 19-cv-1246, 2022 WL 4129398 (D. Colo. Sept. 12, 2022), Colorado joins district courts across the country in applying Maui’s new “functional equivalent” test to determine when discharges to groundwater are subject to the CWA. As demonstrated in Stone, the scope of that test will be tested in courts and Maui may pose challenges to utilities, municipalities and companies that discharge to groundwater.
Background: Supreme Court’s Decision in Maui
As summarized in a prior client alert, the Supreme Court held in Maui that a CWA point source discharge permit is required “if the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from the point source into navigable waters.” 140 S. Ct. at 1468. Under this new test, the Supreme Court identified seven non-exclusive factors “that may prove relevant” in determining functional equivalence:
(1) transit time, (2) distance traveled, (3) the nature of the material through which the pollutant travels, (4) the extent to which the pollutant is diluted or chemically changed as it travels, (5) the amount of pollutant entering the navigable waters relative to the amount of the pollutant that leaves the point source, (6) the manner by or area in which the pollutant enters the navigable waters, [and] (7) the degree to which the pollution (at that point) has maintained its specific identity.
Id. at 1476–77. Time and distance are usually the most important factors. Id. at 1477.
Recent District of Colorado’s Decision in Stone
The District of Colorado decision in Stone involved a setting very different than that in Maui: a gold placer mine located next to the Town of Alma, Colorado, the highest incorporated municipality in the United States (elevation 10,578 feet). Plaintiffs alleged that the defendant mining company improperly discharged pollutants without a permit into the Middle Fork of the South Platte River from four settling ponds and a pond for recycled water. After a four-day bench trial, the court found that two ponds did not have clay liners, the clay liners on the two other settling ponds did not effectively seal the ponds, and the settling ponds were designed to leak. The court also found that the settling ponds were located about 100 feet from the Middle Fork, and water migrated from the settling ponds to the Middle Fork—likely within a matter of days.
The court noted that, based on the position and distance of the ponds, it made “physical and logical sense that a discharge to groundwater so close to the river is the functional equivalent of a direct discharge into the river.” The court analyzed each of the Maui factors to determine functional equivalence:
- The short distance weighed heavily in favor of functional equivalence, particularly given that Maui requires consideration of whether court decisions would “create serious risks of either undermining state regulation of groundwater or of creating loopholes that undermine the statute’s basic federal regulatory objectives.” Maui, 140 S.Ct. at 1477. The Colorado Water Quality Control Division (WQCD) presumes that discharges to groundwater within 300 feet of a surface water result in surface water discharge.
- The roughly two-day transit time of discharges to the Middle Fork also weighed in favor of functional equivalence.
- The nature of the ponds’ construction and embankments weighed in favor of functional equivalence, although there was limited evidence about the composition of the soil below the settling ponds.
- There was little-to-no evidence on the remaining factors—change or dilution of pollutant, amount of pollution at point source and entering navigable water, manner or area by which pollutant enters navigable waters, and density of pollutants—and thus the court afforded those factors no weight.
Notably, defendants did not present or rebut evidence on key issues, including composition of the soil underlying the ponds, thickness of the clay and whether soil between the ponds and the Middle Fork filtered pollutants.
The court concluded that the settling ponds’ discharge of pollutants through groundwater to the Middle Fork was the functional equivalent of a direct discharge and, as such, the defendant mining company violated the CWA because it discharged pollutants from a point source to a navigable water without a permit. The court did not consider that the Colorado Division of Reclamation, Mining and Safety (DRMS) issued a permit for the mine site but did not require a separate discharge permit.
The court could have imposed a penalty of up to $165 million but settled on a $500,000 penalty, equivalent to the amount the company saved by not properly lining the ponds. The court declined to impose injunctive relief.
The defendant mining company has appealed the court’s decision on functional equivalence and penalties to the Tenth Circuit. See Stone Mountain v. High Mountain Mining Co., Case No. 22-1349 (filed Oct. 11, 2022).
Implications
Although Maui recognized other factors could impact functional equivalence, the District of Colorado’s opinion focused solely on the seven factors outlined by the Supreme Court, with great emphasis on the distance and transit time. This is consistent with courts in other jurisdictions that have considered similar questions. See, e.g., Conservation Law Found., Inc. v. Town of Barnstable, Massachusetts, No. 21-cv-10258, 2022 WL 2833951, at *8 (D. Mass. July 20, 2022) (holding that an effluent release was not functionally equivalent of direct discharge where travel time was 21 years); Black Warrior River-Keeper, Inc. v. Drummond Co., Inc., 579 F. Supp. 3d 1310 (N.D. Ala. 2022) (finding no genuine dispute of material fact that a release was the functional equivalent of a discharge where groundwater flowed up to 100 feet and reached a jurisdictional water in 14.6 days).
Maui also directed courts to consider potential interference with state regulations and policy. Colorado already stringently regulates groundwater. Indeed, since the mid-1990s, the WQCD has required permits for discharges of pollutants to groundwater connected to surface water. Pursuant to a memorandum of agreement between WQCD and DRMS, WQCD regulates point source discharge to surface water and DRMS regulates mining site discharge “other than point source discharges to surface water,” including discharge from mining sites to groundwater. Maui’s “functional equivalent” standard does not fit neatly into Colorado’s existing regulatory structure because under Maui, some discharges to groundwater may be considered point source discharges to surface water. Indeed, as a state water quality official noted at trial, WQCD had started to discuss with DRMS whether the defendant mining company required a permit and which regulatory agency would be responsible. Plaintiffs’ lawsuit essentially preempted a determination by the state agencies as to which agency had jurisdiction.
The facts of Stone—particularly the design of the ponds, the lack of evidence on certain key issues and the unresolved issue of which state agency had jurisdiction—were unique and may not readily extend to other situations. Yet any entities within and outside Colorado concerned about potential noncompliance with the CWA’s permitting requirements based on actual or potential discharge to groundwater should review operations and consider the following actions:
- Investigate releases of water to groundwater.
- Determine whether there is a hydrological connection between discharges to groundwater and waters of the United States (however it may be defined at the time).
- If there is a hydrological connection, analyze the distance of the discharge to the navigable water, the transit time, materials between discharge and navigable water, and the amount and dilution of pollution.
Additionally, because Maui left open the door for courts and the Environmental Protection Agency to more fully define how the “functional equivalent test” should be applied, entities discharging to groundwater should carefully consider how jurisprudential and regulatory developments may impact their operations.
This document is intended to provide you with general information regarding the application of County of Maui v. Hawaii Wildlife Fund. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.