Appealed from: Maine Supreme Judicial Court
Oral argument: Feb 21, 2006
Section 401 of the Clean Water Act requires that a facility requiring a federal license, such as a nuclear power plant, must receive state water quality certification when it engages in activities “which may result in any discharge” into lakes and rivers. In this case, the Supreme Court will decide whether water flowing through hydroelectric dams constitutes a “discharge.” Petitioner Warren argues that the mere flow of water through an existing dam does not constitute a discharge on the grounds that the Supreme Court had previously held in the Miccosukee case that the term “discharge” requires an addition of water to the existing flow from a distinct body of water, and thus does not refer to the removal and replacement of water from and to the same body of water. Florida Water Mgmt. Dis. v. Miccosukee Tribe, 541 U.S. 95 (2004). Respondent Maine Board of Environmental Protection and other respondents contend that state water quality certification is required for dams because the definition of discharge used in the Miccosukee case can be distinguished from this case via two main avenues. First, respondents argue that Miccosukee dealt with Section 402 of the Clean Water Act, and is not necessarily binding in this case. Congress’ intent in enacting Section 402, respondents argue, was to regulate pollutants added to the nation’s waters, while Section 401 was aimed at water regulation generally and as such the definition of discharge in Section 401 includes water flowing through dams. Respondents also attempt to distinguish the Miccosukee requirement of an addition of water to the existing flow of water by interpreting “discharge” under the plain meaning of the term. The definition of “discharge,” respondents claim, includes the Miccosukee requirement, but is not limited by it; hydroelectric dams are thus subject to state regulation because the more expansive plain meaning of “discharge” includes the discharge of water from a dam even without an addition to the flow. The resolution of the conflicting definitions followed by Miccosukee and state environmental protection boards will have far-reaching effects on the profitability and efficiency of hydroelectric dams throughout the nation, energy production generally, and the environment.
Does the mere flow of water through an existing dam constitute a “discharge” under Section 401, 33 U.S.C. 1341, of the Clean Water Act, despite the Supreme Court’s 2004 holding in South Florida Water Management District v. Miccosukee Tribe of Indians that a discharge requires the addition of water from a distinct body of water?
The Clean Water Act protects the nation’s navigable waters in part by requiring state certification for dams which involve “discharge” into navigable waters. What is the definition of “discharge” under Section 401 of the Clean Water Act, given the precedential force of a previous Supreme Court ruling on Section 402 of the Clean Water Act which stipulates that the term “discharge” requires the addition of water from another body of water?
Petitioner S.D. Warren Company (“Warren”), a subsidiary of South African Pulp and Paper, owns and operates five hydroelectric dam projects on the Presumpscot River in Cumberland County, Maine. S.D. Warren Company v. Maine Board of Environmental Protection, 2005 ME 27 at 2. In order to operate the dams, Warren had to obtain a license from the Federal Energy Regulatory Commission (“FERC”). Brief for Petitioner at 4-5, quoting (16 U.S.C. § 817). While FERC largely controls the licensing of dams, under section 401 of the Clean Water Act of 1970, the states can impose additional water quality requirements before FERC issues a license. Brief for Petitioner at 4-5. Although Warren had previously obtained licenses for the five dams between 1979 and 1981, the State of Maine did not try to enforce section 401 certification on either of those two occasions. Brief for Petitioner at 5.
In 2003, Warren filed a request for certification with the Maine Department of Environmental Protection (“DEP”), under their assumption that because the dams caused no discharge into the river within the meaning of section 401, state certification under 401 was not required. Brief for Petitioner at 9. In April of 2003, DEP approved water quality certification subject to a number of conditions. S.D. Warren Company, 2005 ME 27 at 2. Apparently unhappy with DEP’s conditions, Warren appealed DEP's decision to the Board of Environmental Protection (“BEP”) in May of 2003. BEP reviewed the case de novo and affirmed the decision in October of 2003. Brief for Respondent BEP at 11. Warren unsuccessfully appealed this decision to the Maine Superior Court, and then the Maine Supreme Judicial Court, arguing that section 401 of the Clean Water Act did not apply to Warren because section 401 only regulates activities which “may result in any discharge into the navigable waters.” S.D. Warren Company, 2005 ME 27 at 6. While all parties conceded that Warren’s dams do not add any additional water or pollutants to the Presumpscot River, the Maine Supreme Judicial Court affirmed the decisions below on the grounds that the water passing through Warren’s dams was removed from the river on one side of the dam, then “discharged” on the other side of the dam, thus rendering Warren susceptible to the requirement of state certification. Id. at 7.
According to the Hydropower Reform Coalition, there are roughly 2,500 hydroelectric dams affecting more than 500 rivers in 45 states that could be affected by this case. If Warren is successful in defining “discharge” narrowly, such that hydroelectric dams will no longer be subject to state regulation under section 401 of the Clean Water Act, then a significant environmental protection barrier to hydroelectric dam operation will be removed. While a victory for Warren would leave federal regulation intact, it would also essentially prevent all state regulation of other hydroelectric dams. Without state regulation, hydroelectric dams similar to those operated by Warren could be able to operate with possibly less regard for environmental considerations such as the depletion of fisheries and the degradation of river ecosystems, unless federal law directly addressed the issue. Although Warren’s dams do not discharge pollutants into the river, the dams reduce the amount of oxygen dissolved into the water (which may degrade the river’s ecosystems), pose a significant hazard to wildlife attempting to pass through the dam’s turbines and bypass channels, and may impede some recreational access to and use of the river. Brief for Respondent BEP at 10.
The construction and operation of dams typically affect the water levels of a river system, including lakes and branches up and downstream. If the water level changes at established waterfront properties, it is possible that landowners’ property values would change. Constitutional rights might even be implicated if a landowner’s property value is substantially diminished by rising water levels caused by relaxing state regulation, implicating the Fifth Amendment of the United States Constitution.
A victory for Warren might also affect the operation of water-based tourist and recreational businesses. If state regulation were relaxed, the number and scale of dams across the nation might increase; depending on the particular effects of each new dam, we might see a reduction in some tourist or recreational operations (e.g. a canoeing business might have difficulty with a new dam blocking the river), and perhaps an increase in other business if the new conditions create new opportunities (e.g. a new lake is created which is perfect for paddle-boating).
While a ruling for Warren will likely not spell immediate disaster for the environment since the stated considerations of the Federal Energy Regulatory Committee (“FERC”) include fish and wildlife, in light of rising oil and energy costs, FERC may be more likely to be concerned with increasing national energy output than states’ environmental considerations. In this particular case, according to findings by the Maine Department of Environmental Protection, the additional restrictions imposed by state certification would result in a loss of 1/7th of Warren’s energy output, which is equivalent to the energy provided by ten thousand barrels of oil per year. Brief for Petitioner at 9. If a ruling in favor of Warren is extended to all hydroelectric dams across the nation, then the U.S. aggregate energy production may greatly increase as hydroelectric dams are re-licensed without the added burden of state regulation. Since the proportion of total U.S. electricity produced by hydropower may be as high as 8-12% of the nation’s electrical output, a relaxation of licensing restrictions might cause an increase in energy production dramatic enough to impact the worldwide price of oil. International Water Power and Dam Construction, Country Profiles – United States, available at <http://www.waterpowermagazine.com/story.asp?storyCode=2019673> (last visited January 31, 2006).
A further potential result of the case could be increased focus on the federal regulators if state regulators lose their teeth. Public pressure may cause FERC to re-examine its existing policies and impose more stringent environmental protections. This would increase the costs involved in administering and enforcing FERC regulations. However, the costs may not increase too dramatically because FERC is theoretically already imposing all of the water quality regulations it thinks are necessary.
If, on the other hand, Respondents are successful in defending the broad definition of “discharge,” then even non-polluting hydroelectric dams like those operated by Warren will continue to be required to undergo state certification. Brief for Respondent BEP at 6. If state regulation is upheld, then the previously mentioned potential gains in national energy production might turn into losses as new dams are built or as dams previously licensed under less stringent regulation come up for re-licensing and are forced to divert their energy production toward maintaining water quality.
A victory for Respondents might also maintain or encourage a more finely-tailored system of local regulation of water quality. Although state certification is usually overseen by appointed or professional administrative officials and not elected representation, state regulators should theoretically be closer to and more familiar with the dams they regulate and their constituents than federal regulators in FERC.
The case addresses whether hydroelectric dams must comply with the Clean Water Act (“CWA”). A facility requiring a federal license, such as a nuclear power plant, must comply with the CWA when it engages in activities “which may result in any discharge” into lakes and rivers. Does a dam produce “discharge” when water is simply channeled through its turbines and returned to the river on the opposite side of the structure? That deceptively simple question lies at the heart of the current controversy. Petition for Writ of Certiorari, S.D. Warren Company v. Maine Department of Environmental Protection, 2005 WL 1170408 1 (2005) (No. 04-1527) [hereinafter ‘Writ’].
Petitioner Warren’s Argument
Warren urges a negative response. A dam does not discharge water under § 401 of the CWA when it impounds water on one side of a river and then releases it on the opposite side. To support this interpretation, Warren directs the Court to a recent decision, in which the Court interpreted discharge to mean addition. In that case, Florida Water Mgmt. Dist. v. Miccosukee Tribe, the Court decided whether a flood control project in South Florida had to comply with the Clean Water Act by receiving a state certification. Florida Water Mgmt. Dis. v. Miccosukee Tribe, 541 U.S. 95 (2004). The flood initiative involved pumping water from a canal to a wetland area sixty feet away. Miccosukee Tribe, 541 U.S. at 112. The Court explained that a facility only discharges into a water body when it adds something not previously there: “If one takes a ladle of soup from a pot, lifts it above the pot, and pours it back into the pot, one has not ‘added’ soup or anything else from the pot.” Id. at 110. But how does a court distinguish when water has been added to a wetland, and when water has merely been transferred from one part of a water body to another part of that same body? The Court resolved that water is only added to when it comes from a “meaningfully distinct” source. Id. at 112. Because the canal in Miccosukee did not channel water from a meaningfully distinct source into the wetlands, it did not add anything to the wetland and therefore did not result in a discharge. Id.
Warren similarly reasons that a dam does not add water to a river from a meaningfully distinct water body. Rather, the water entering and exiting the dam flows from the same exact river. “It is undisputed that the water above, below, and momentarily within each dam is all part of the same body of water – the Presumpscot River.” Writ at 4.
Warren acknowledges that in Miccosukee, the Court addressed the definition of discharge within the context of Section 402 of the Clean Water Act. The instant dispute, however, involves the reach of § 401. Nevertheless, Warren insists that the Court’s definition of discharge should govern both § 401 and § 402 of the CWA. Writ 10-11. Congress, according to Warren, plainly intended § 401 and § 402 to be uniformly interpreted because it used the nearly identical language in both provisions. § 402 authorizes the U.S. Environmental Protection Agency (“EPA”) or state to “issue a permit for the discharge of any pollutant.” 33 U.S.C. § 1342(a)(1). § 401 requires state water quality certification for a federally-licensed activity that may “result in a discharge.” 33 U.S.C. § 1341(a)(1). Warren admits that § 401 requires the facility to “result in a discharge” rather than “result in discharge of a pollutant,” as provided under § 402. However, Warren refers the Court to the definitional section of the overall CWA. There, Congress provided: “The term ‘discharge’ when used without qualification includes a discharge of a pollutant.” 33 U.S.C. § 502(16) (emphasis added). Because discharge is used without qualification in § 401, that section should therefore read, “results in a discharge, including discharge of a pollutant.” The near identity of § 402 and § 401 after consulting the definitional section demonstrates that “discharge,” as used in § 401, must be read consistently with the term, “discharge of a pollutant,” used in § 402. See North Carolina, 112 F.3d at 1187. Because Warren does not discharge a pollutant into the water, it is not subject to Section 401. Writ at 10.
Warren further cites Miccosukee and two circuit court decisions in construing the definition of discharge to include an addition. Since the bald term discharge in § 402 includes an addition to the water, so too does the term discharge in § 401. Both of the opinions in National Wildlife Federation v. Consumers Power Co., 862 F.2d 580 (6th Cir. 1988), and National Wildlife Federation v. Gorsuch, 693 F.2d 156 (D.C.Cir. 1982), further tended to support the idea that water is not added to a river by a dam; In Consumers Power Co., the court held that water flowing through a hydroelectric facility “never loses its status as water of the United States,” meaning that there is no withdrawal of water from the river and thus no replacement or discharge which makes dams subject to state certification. National Wildlife Federation v. Consumers Power Co., 862 F.2d at 589.
The Maine Department of Environmental Protection (“MDEP”) contends that Warren misconstrues the requirement that the facility “result in a discharge, including discharge of a pollutant.” MDEP insists “including” is not a word of limitation: a facility that results in discharge, but not discharge of a pollutant, must still comply with the CWA. § 502(16); Writ at 20. Warren responds that includes defines the complete universe of activities triggering the Clean Water Act. Thus, only facilities releasing pollutants are subject to regulation. Indeed, if Congress intended activities discharging pollutants to be a subset of rather than exhaustive list of all activities regulated by the Clean Water Act, it would have inserted the clause, “but is not limited to,” as it does elsewhere in the Act. See, e.g., 33 U.S.C. §§ 1321(a)(1) (definition of discharge under that section ‘includes, but is not limited to’), 1322(a)(9), 1362(14). Congress’ decision to omit this language under § 502(16) “reflects an indication of Congressional intent to use the word ‘includes’ as a word of limitation, limiting the word ‘discharge’ to a discharge of a pollutant or pollutants.” 33 U.S.C. § 502(16); Writ at 20.
Warren further argues that relicensing an already existing facility, such as its dam, does not result in discharge, as required under § 401. Id. at 4, an argument which distinguishes them from those proposing a new hydroelectric facility. Indeed, the relicensing does not result in a discharge. To the contrary, even without license renewal, continued operation of the existing plant would result in a discharge. Warren cites North Carolina v. FERC in support of this proposition. North Carolina v. FERC, 112 F.3d 1175, 1188 (D.C.Cir.1997). In North Carolina, the court held that a federally-licensed facility did not result in a discharge under § 401 when relicensing merely altered a preexisting discharge. Writ at 21.
Finally, Warren argues that requiring hydropower facilities to comply with § 401 and obtain a state water quality certification would undermine federal licensing authority in the power arena. Id. at 24. Warren acknowledges that the adoption of § 401 certainly expanded state discretion to review the environmental impacts of hydropower facilities; however, requiring state certification would “overstep” states’ “limited authority.” Writ at 25. By withholding water quality certificates, a state could effectively block operation of a major hydropower facility, regardless of prior approval by the Federal Energy Regulatory Commission (FERC). Id. Expanding a state’s regulatory authority in this way would, therefore, diminish FERC’s role as the “sole licensing authority.” See California v. FERC, 495 U.S. 490 (1990) (holding that the Federal Power Act grants FERC exclusive jurisdiction over hydropower project licensing). FERC, therefore, would be unable to ensure timely relicensing of power generation facilities across the country, a key statutory mandate. Writ at 25.
Respondent Maine Department of Environmental Protection’s Argument
The Maine Board of Environmental Protection (“MBEP”) insists that dams are subject to § 401 of the Clean Water Act. The plain language, articulated purposes, legislative history, and long-standing administrative interpretation of the CWA all combine to confirm this. Brief for Respondent at 16-41.
MBEP argues that the plain language of the CWA confirms water impounded and then channeled by a dam back into a river is “discharge.” As observed above, the definition section of the CWA provides: “The term ‘discharge,’ when used without qualification includes a discharge of a pollutant, and a discharge of pollutants.” § 502(16). This brief description provides “the nearest evidence we have of definitional intent by Congress.” North Carolina, 112 F.3d at 1188.
MBEP contends that a dam discharges water under the ordinary meaning of this verb. Indeed, water is discharged, or “flow[s] or issu[es] out,” from its channels and concrete impoundments into the river. Webster’s Ninth New Collegiate Dictionary 360 (1991). Warren argued that it would be an “absurdity” to construe a river as discharging or flowing into itself. Writ at 17. MBEP carefully counters that the Presumpscot “is not simply discharging into itself; the water flows into each Facility – including its impoundment, power canal, turbines, and tail race – out of which the water is emitted, i.e. discharged, “into” the River. Brief for Respondent at 23. Moreover, the Supreme Court’s holding in PUD No. 1 of Jefferson County v. Washington Department of Ecology – thatthe flow of water “at the end of the [dam’s] tailrace after the water has been used to generate electricity,” qualifies as discharge – supports MBEP ’s interpretation. PUD No. 1 of Jefferson County v. Washington Department of Ecology, 511 U.S. 700, 711 (1994).
Further, MBEP contends that the Superior Court of Maine properly declined to treat includes as a word of limitation. S.D. Warren Company v. Board of Environmental Protection, 868 A.2d 210, 216 (2005). Congress’ deliberate use of includes strongly indicated it intended “discharge of a pollutant” to be a subset, rather than an exhaustive inventory, of the universe of the kinds of discharge subject to the CWA. Brief for Respondent at 13.
MBEP rejects the Maine Supreme Court and Petitioner’s interpretation of discharge as requiring the addition of something from the outside to the water. Brief for Respondent at 21. MBEP insists that this definition, which the Supreme Court adopted in a recent case involving § 402 of the CWA, should not control § 401 for several reasons. First, Congress’s use of the term discharge instead of addition appears intentional: other parts of the CWA, including a neighboring provision of § 401, do in fact use the word addition. Brief for Respondent at 21. MBEP also emphasizes that Congress did not adopt § 502(16), which defines discharge, until it enacted § 402, a provision separate from § 401 that regulates pollutants. Had Congress intended § 502(16) to govern not only § 402 but also § 401, it would have drafted § 401 accordingly. It would have added, for example, “may result in the discharge of pollutants” to § 401. Brief for Respondent at 21.
The express purpose of the Clean Water Act -- “to prevent, reduce, and eliminate pollution” – also supports state certification of hydroelectric plants, which threaten aquatic habitats in myriad ways. 33 U.S.C. § 1251; PUD 1, 511 U.S. at 719-20. Narrowing discharge to discharge of pollutants would contravene the Supreme Court’s conclusion in PUD No. 1 that § 401 empowers states to impose certain conditions on facilities in order to promote a water body’s designated uses, such as fishing or swimming. See PUD 1, 511 U.S. at 719-20. Eliminating a state’s authority to regulate hydroelectric dams, which can devastate water quality, would cripple its ability to achieve those uses. Brief for Respondent at 25. Excluding hydroelectric dams from state regulation under § 401 would also frustrate CWA’s purposes by forcing states to impose onerous new restrictions on other industries to achieve their respective water quality goals. These unanticipated requirements, they argue, would “upset long-held expectations and present serious practical difficulties.” Brief for Respondent at 25-26.
Respondents also argue that the legislative history of § 401 confirms that Congress did not intend to limit states’ regulatory authority over facilities releasing tangible pollutants. Brief for Respondent at 27. MBEP notes that the House Report accompanying the 1970 Act is replete with references to state certification of dams and other large industrial facilities that do not necessarily emit pollutants. Congress intended mandatory certification of a “wide variety of license and permits….issued by various Federal agencies,” involving “activities or options potentially affecting water quality.” H.R. Rep. No. 127 (1970), reprinted in U.S.C.C.A.N 2691, 2698. Finally, the House Report stated, “a federal license or permit of some kind is required for almost all electric generating plants, and … the license [should be conditioned] upon compliance with applicable water quality standards.” H.R. Rep. No. 127 (1970), reprinted in 1970 U.S.C.C.A.N. 2961, 2968.
Warren contends that the 1972 amendments to the CWA, which defined discharge as discharge of pollutants, govern both § 402 and § 401. Warren insists this is consistent with Congress’ intent to limit state discretion over the certification of federally-licensed power plants. To the contrary, careful analysis of the legislative history, according to MBEP, discloses that Congress intended to broaden rather than narrow state regulatory authority over facilities that could impair water quality. Brief for Respondent at 34-35.
The 1972 amendments to the CWA reenacted § 21(b) -- initially found in the 1970 Act -- as § 401(a). Brief for Respondent at 27. These nearly identical provisions authorized state certification of facilities discharging into navigable waters. The fundamental contribution of 1972, therefore, was the adoption of § 402, which created the National Pollutant Discharge Elimination System (“NPDES”). As discussed earlier, the 1972 amendments also defined “discharge” to include “discharge of any pollutant.” § 502(16). The 1972 amendment contained no language purporting to apply this definition, however, to § 401. Brief for Respondent at 34-35. To the contrary, Congress apparently sought to broaden -- not narrow -- state regulatory authority by adopting the NPDES controls on point sources of pollution. Brief for Respondent at 35. Indeed, then-EPA Administrator William Ruckelshaus stated during House Committee on Public Works hearings on the bill, ”Water quality standards need to be strengthened and expanded to cover all waters…Effluent limitations are a means for achievement. They should not become ends in themselves.” Statement of William Ruckelshaus, Administrator, EPA, Hearings on H.R. 11896, House Committee on Public Works, Dec. 7, 1971, 2 Legis. Hist. 1188. Thus, the EPA Administrator himself did not interpret the creation of the NPDES program as implying any contraction in states’ oversight powers under § 401.
Finally, MBEP stressed that long-standing administrative interpretation of § 401 confirms that the provision covers hydroelectric facilities. The EPA, charged with the administration of the Clean Water Act, has consistently found that § 401 empowers states to regulate these facilities. Its Water Quality Standards, for example, states that § 401 “applies to all Federal agencies that grant a license or permit. (For example, … licenses required for hydroelectric projects issues under the Federal Power Act.).” Another EPA publication, Wetlands and 401 Certification: Opportunities and Guidelines for States and Eligible Indian Tribes, similarly interprets § 401. Environmental Protection Agency, Wetlands and 401 Certification: Opportunities and Guidelines for States and Eligible Indian Tribes, at 20-23 (1989). FERC, for its part, has construed § 401 as fully empowering states to certify hydropower projects, entirely independent of whether they discharge pollutants. 18 C.F.R. §§ 4.34(b)(5), 16.8; Federal Energy Regulatory Commission, Handbook for Hydroelectric Project Licensing and 5 MW Exemptions from Licensing, at B-2 & D-3 (2004). The views of the agencies charged with administration of this statute are entitled to some deference in the form of persuasive authority. Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 865-66 (1984).
The Supreme Court will likely conclude that federally-licensed hydropower facilities are subject to § 401. Confirming state power to protect aquatic habitats and attain water quality standards is consistent with the Court’s long-standing inclination to protect state sovereignty under our system of federalism. Although an expansive interpretation of § 401 could encroach on FERC’s role as the principal regulator of the power industry, the court may conclude the imposition is warranted by the Clean Water Act’s express purpose to protect the nation’s navigable waters. Rising energy and electricity costs, however, may persuade the Court that adding impediments to the licensing of hydroelectric and other generation facilities would be unwise.
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