In Sierra Club v. Virginia Electric & Power Company (“VEPCO”), the Fourth Circuit Court of Appeals affirmed in part and reversed in part a district court decision finding VEPCO liable for unpermitted discharges to navigable waters through groundwater from a coal ash landfill and settling ponds. VEPCO had not challenged the lower court’s finding that there was a direct hydraulic connection to the navigable water through groundwater, and the court accepted without discussion that such a connection was sufficient to establish liability under the Clean Water Act, based on another Fourth Circuit decision earlier this year in Upstate Forever v. Kinder Morgan Energy Partners. However, the court went on to reverse the district court’s finding of CWA on a different basis, concluding that the CWA requires discharge from a “point source” – defined as a ”discernible, confined and discrete conveyance,” and that as so defined, a settling pond (and implicitly, a landfill) is not a devise for conveyance, and hence not a “point source.”

As the court in Sierra Club made clear, this ruling does not give companies a free pass to pollute streams. The ponds and landfill in question were also subject to RCRA regulation, and as the court itself observed, the plaintiffs could have used the citizen suit provisions of RCRA if they were concerned that the State was not adequately pursuing corrective action under RCRA. That is very likely to be the case in most situations where a party might use this defense to avoid CWA liability. What Sierra Club does do is lower the potential for successful CWA citizen suits, which generally provide environmental groups with a more straightforward route to establishing liability, and therefore shift the leverage in the settlement negotiations that almost always resolve these disputes, given the fee shifting provisions.

Two court of appeals decisions this year have raised hopes and concerns (along with cert petitions) that the CWA may be used in at least some circumstances to address discharges through groundwater to navigable waters. Direct discharges to navigable waters have been subject to permit obligations for decades resulting in major improvements in water quality. Diffuse discharges through groundwater were generally thought not to be covered by the CWA’s NPDES program and remain the most serious threat to water quality in the United States. However, the Ninth Circuit in Hawai’i Wildlife Fund v. County of Maui and the Fourth Circuit in Upstate Forever held that where it is established that there is a direct hydraulic connection from the groundwater to the navigable water, a discharge from a point source that reaches the navigable water can be a CWA violation.

Sierra Club does not change that test. Both of the earlier cases involved sources (an injection well and a broken pipe) that fall within the statutory definition of point source. However, the decision may relieve the concerns of parties who operate settling ponds or tailings piles near navigable waters that might be a target of citizen suits, regardless of whether they were operating in compliance with permits under other state and federal statutory regimes.