We're All Ad Hoccers Now: SCOTUS Penn Centralizes The Clean Water Act ("From" Is Too Hard To Define, So Here's A List Of Factors)

by Robert Thomas, Inverse Condemnation, April 23, 2020

As any takings lawyer can tell you, ad hoc rules and non-exhaustive lists of "factors" a fact-finder considers can be seductive. After all, shouldn't the outcome of a case turn on its particular facts? Who could argue with that?

The problem lies when those factors are applied in a way that seems more like one of the very bright-line rules that a list of factors is meant to avoid. For example, in the takings context, we see the "polestar" Penn Central ad hoc regulatory taking three-factor test being applied most consistently as a one-strike-and-your're-out test that (almost invariably) means the property owner loses. In theory, it might make some sense, but in practice it has become more like a per se rule: you lose, property owner. That isn't truly a "case-by-case" analysis. 

Now, in takings that may be by design -- you at least can see why the Supreme Court might want to fashion a rule that by default gives government a lot of leeway when it regulates in the public interest and affects property's use and property rights. Government has a somewhat free hand, and if property owners believe they are being forced to bear more than their fair share of the economic burden, they can gin up a case for compensation. See here for a recent example. You may win, or you may not. But until you win (and even after, when the remedy sought is compensation), the status quo remains -- government can regulate, it just might have to provide after-the-fact compensation. (And don't get us wrong: we're not saying that's the way it should be, just the way it is.)  

But what about a statute? In this case, the Clean Water Act's requirement that someone get permission from the EPA in advance of putting a pollutant "from" a point source into navigable waters. You might think that one of the points of having a statute is that is establishes clear lines about when a permit is needed and when it isn't, so that you can structure your actions accordingly. Thus, you might also think that it would be important to have a much clearer line about what is ok to do without a EPA CWA permit, and what will result in some pretty hefty penalties if you don't get a permit. And the word "from" is pretty clear, right? 

If that's what you thought, you'd be wrong. The word "from," as we noted in our oral argument after-action report (along with our William and Mary class, we attended oral arguments back in November -- that above picture is us, after we got out of the Court), could mean a lot of things: it could mean directly from; it could mean indirectly from. And given the variety of ways that seemingly reasonable people define "from," you might think that Congress would do us all a favor and define what they meant.

But if that's what you thought, you'd again be wrong. Because today, the U.S. Supreme Court issued an opinion in County of Maui v. Hawaii Wildlife Fund, No. 18-260 (Apr. 23, 2020) where it couldn't define the word "from." During the November arguments, the advocates proposed various analogies about what the term means, using whiskey flasks, punchbowls, groceries. And there were all sorts of probable and improbable hypotheticals from the bench. Read page 14 of the majority opinion for how some of those hypos worked their way into the opinions. 

To take another example: If Timmy is told to “add water to the bath from the well” he will know just what it means—even though he will have to use a bucket to complete the task.

Slip op. at 14.

The point being that "from" has a variety of meanings, dependent on the context. And the context here is that Congress wanted to keep water clean. 

The Ninth Circuit thought it was being pretty clear: "from" a point source means "fairly traceable." What we'd call more like a "butterfly effect" test or a "but for" test. If you drop some dye into your point source and it shows up in navigable waters -- voila! -- you better have obtained a permit. That argument met with a receptive audience in the lawsuit, filed in the U.S. District Court for the District of Hawaii after treated effluent water -- which the County of Maui puts into injection wells -- ended up, like most things do in porous lava-rock Hawaii, in the nearby Pacific Ocean. The lawsuit also found a receptive audience in the Ninth Circuit, which applied the "fairly traceable" test and affirmed the County should have obtained the EPA's permission beforehand.

All seemed well for the plaintiffs until the 2016 election and a change in the makeup  of the Supreme Court. (You know why.) Thus, when the County petitioned the Court last year to hear the case and the Court agreed, there was a bit of a freak-out and the plaintiffs desperately tried to settle the matter to get their own case away from the presumed Supreme Court right-wing majority that might -- heaven forbid! -- define "from" in a less expansive way than "fairly traceable."

Well, it turns out they had nothing to worry about in that department, because there was a solid six-Justice majority (Chief Justice Roberts and Justice Kavanaugh joined the Court's left wing) that rejected the County's (and the federal government's) arguments that by using "from," Congress meant to limit the situations that require a CWA permit. But at the same time, the Court did not accept (in form) the Ninth Circuit's "fairly traceable" standard either.

The majority opinion, authored by Justice Breyer (who at oral arguments quizzed the advocates about whether they might accept a "functional equivalent" test -- something that none of the lawyers was willing to accept), held that "from" means directly, but also means things that look like directly: "[w]e conclude that the statutory provisions at issue require a permit if the addition of the pollutants through groundwater is the functional equivalent of a direct discharge from the point source into navigable waters." Slip op. at 1. 

Well, that doesn't seem any more clear than "from," does it? Not to us it doesn't, and the majority acknowledged that it wasn't really clarifying the situation as much as it was adding what might be a way of looking at each case that is not without its "difficult[ies]." Slip op. at 16. 

As our favorite legal movie asks, "what's the vibe of the thing?" 

So here they are, folks, your (nonexclusive) list of factors" that might be "potentially relevant" to a property owner's analysis of whether a discharge is the "functional equivalent" of a direct discharge: 

The difficulty with this approach, we recognize, is that it does not, on its own, clearly explain how to deal with middle instances. But there are too many potentially relevant factors applicable to factually different cases for this Court now to use more specific language. Consider, for example,just some of the factors that may prove relevant (depending upon the circumstances of a particular case): (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, (7) the degree to which the pollution (at that point) has maintained its specific identity. Time and distance will be the most important factors in most cases, but not necessarily every case.

Slip op. at 16. 

Now hold on a minute. The Court expressly rejected both the Ninth Circuit's "fairly traceable" standard, and Maui and the federal government's suggestion of a more direct reading of "from." But what is the difference between "fairly traceable" and "functional equivalent?" We're not seeing much daylight between the two. If an indirect discharge is the "functional equivalent" (same thing) as a direct discharge, doesn't that mean the first thing you do is to trace the pollutant from the point source, through whatever means it actually reaches navigable waters? We thinking that the big difference between the Ninth Circuit's test and the "functional equivalent" test is that after you trace, you apply a bunch of factors to see if there's any reason that the discharge should not require a permit. Mitigating factors, let's call them. In other words, the standard is "fairly traceable unless there's some reason to not require the discharger to get a permit."

And to us, "time and distance" sounds an awful lot like "foreseeable." (Just sayin.')

[Barista's note: be thankful, takings lawyers, that Penn Central lists only three factors (although Murr expanded that).]

We predicted Justice Kavanaugh and the Chief would be the fulcrum of the decision, and it looks like we were mostly right (both joined the majority). They must have found the limiting principles that during arguments they were searching for. But we don't see any plainly in the statute itself, or the new "functional equivalent" factors test. The majority responded to that criticism by telling owners that they can just look to the courts for the answers:

At the same time, courts can provide guidance through decisions in individual cases. The Circuits have tried to do so, often using general language somewhat similar to the language we have used. And the traditional common-law method, making decisions that provide examples that in turn lead to ever more refined principles, is sometimes useful, even in an era of statutes.

Slip op. at 17.

In short, get a subscription to Westlaw, or better yet, take a chance on getting sued and let a court figure out whether you should have obtained the EPA's  permission first. 

And here's where we pick up the dissenter's main critique: that if "from" is not clear in the statute, it is up to Congress -- not the courts -- to clarify it. Congress has limited powers (the CWA was adopted under the Commerce power), and the states are there to fill in any regulatory gaps. See, e.g., Dissent at 4 (Thomas, J., dissenting).

So who "won" this one? We can't quite say, because -- like the term "from" -- there are many ways to see it. The Court rejected both sides' arguments. If you, like us, are in the Ninth Circuit, the "fairly traceable" test is no longer the test. If you are a western environmental plaintiff's advocate, your job just got a little harder (even if the result may not change). Technically speaking, the County won and the enviros lost this round (the Court vacated the Ninth Circuit's judgment and sent the case back for more, applying the "functional equivalent" test). But even so, if we were the County of Maui, we wouldn't be breaking out the banners and fireworks just yet because we're pretty sure how this is going to turn out even applying the new legal test -- nothing in Hawaii is that far from the ocean, and because "time and distance" are the big factors, we don't think the outcome is going to be any different on remand. If you were in a circuit where a different, narrower test governed, then your world just got a little easier as a plaintiff and more troubling as a property owner.

Either way, you're going to be trying to apply some very fact-intensive factors that do not on their face seem particularly amenable to summary judgment. The full employment act for lawyers: now there's an idea we can all get behind.  

Our only remaining question is -- now that the Court has Penn Centralized the Clean Water Act -- will the lower courts apply it like a true ad hoc test, dependent on time and distance and some other factors, or more like Penn Central itself, where the usual result is going to be that you run a big risk if you don't get a permit? We shall see.

PDF: County of Maui v. Hawaii Wildlife Fund, No. 18-260 (U.S. Apr. 23, 2020)