Cape Fear River Watch, et al v. Duke Energy Progress, Inc.
ORDER finding as moot 28 MOTION for Permission to Inform the Court Concerning Developments Regarding Criminal Investigation Into Sutton Site and Litigation and 32 Second MOTION for Permission to Inform the Court Concerning Developments Regard ing Criminal Investigation Into Sutton Site and Litigation; granting in part and denying in part 15 Motion to Dismiss for Failure to State a Claim - The court GRANTS IN PART defendant's motion where itmoves to dismiss plaintiff's ground water-related claims for lack of jurisdiction, and DENIES IN REMAINING PART the motion to dismiss (DE 15). Plaintiffs' motions seeking permission to inform the court are DISMISSED AS MOOT (DE 28, 32). In accordance with the court's Novembe r 15, 2013, order, the stay on discovery is hereby lifted. With reference to the court's initial order regarding planning and scheduling, entered November 6, 2013, the parties shall conduct the Rule 26(f) conference within twenty-one (21) days f rom entry of this order and adhere to other requirements therein set out. If either side determines a conference by telephone with the court in advance of entry of the case management order is appropriate, that information shall be included in the parties' joint report. Signed by District Judge Louise Wood Flanagan on 6/9/14. (Tripp, S.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
CAPE FEAR RIVER WATCH, INC.;
SIERRA CLUB; and WATERKEEPER
DUKE ENERGY PROGRESS, INC.,
This matter comes before the court on defendant’s motion to dismiss for failure to state
a claim and for lack of subject matter jurisdiction (DE 15), to which plaintiffs have responded and
defendant replied.1 These issues are now ripe for review. For the following reasons, defendant’s
motion is granted in part and denied in part.
Also pending before the court are plaintiffs’ two motions for permission to inform the court concerning
developments regarding a criminal investigation and other litigation (DE 28, 32) to which the court responded in order
entered March 5, 2014, inviting the parties to consider utility of a case stay and/or to promote any additional briefing
schedule which may be useful related to events ongoing where plaintiffs were directed to cease filing motions describing
events daily unfolding because a more formal process of presentation and response was deemed necessary. Ultimately,
a stay was not determined appropriate and on March 20, 2014, the court put in place the formal briefing schedule. As
such, DE 28 and 32, to which no separate responses have been made, are deemed moot and the court refers instead for
the sides’ respective views concerning impact, if any, of ongoing matters to the supplemental briefs (DE 39, 40)
subsequently filed in accordance with the court’s March 20, 2013, order, as noted herein. Accordingly, the clerk is
directed to terminate those permission motions at DE 28 and 32. However, to the extent any attachments or exhibits
thereto were referenced in the parties’ supplemental briefs or their original briefs, those documents are considered.
STATEMENT OF THE CASE
Cape Fear River Watch, Inc., Sierra Club, and Waterkeeper Alliance (“plaintiffs”) initiated
this matter on September 12, 2013,2 by filing complaint against defendant pursuant to the Clean
Water Act, 33 U.S.C. §§ 1251-1376 (“CWA” or “the Act”) citizens’ suit provision, alleging
violations through unauthorized surface discharges into Sutton Lake in North Carolina (Count I),
entering of removed substances into state waters and navigable waters of the United States (Count
II), and discharges through close hydrologic flow into Sutton Lake (Count III). Plaintiffs seek
declaratory and injunctive relief as well as civil penalties and costs. Defendant moved to dismiss
in lieu of answering the complaint on November 5, 2013, pursuant to Rules 12(b)(1) and 12(b)(6)
of the Federal Rules of Civil Procedure. Plaintiffs responded in opposition on December 17, 2013,
and defendant replied on January 17, 2014.
Although the motion to dismiss was submitted for consideration on January 21, 2014,
plaintiffs filed two motions for permission to inform the court concerning developments regarding
criminal investigation into the Sutton Site3 and litigation on February 25, 2014, and March 5, 2014.
In order to encourage a more formal process of presentation of such additional materials, the court
ordered the parties to consider a stay of the case and/or additional briefing on the motion to dismiss
on March 5, 2014. The court also tolled defendant’s response time to plaintiff’s motions. After the
parties responded, the court further ordered on March 20, 2014, that a temporary stay was not
Before plaintiffs filed suit they gave defendant, the Administrator of the United States Environmental
Protection Agency (“EPA”), and North Carolina Department of Environmental and Natural Resources (“DENR”) notice
of the violations specified in the complaint and of plaintiffs’ intent to file suit after sixty (60) days should those violations
continue, pursuant to 33 U.S.C. § 1365(b)(1)(A), and 40 C.F.R. § 135.2.
The Sutton Site is defendant’s electricity-generating facility located north of Wilmington off Highway 421
in New Hanover County, North Carolina.
appropriate, and provided that supplemental briefing would be conducted on the motion to dismiss.
On April 3, 2014, plaintiffs submitted a supplemental brief, and on April 17, 2014, defendant
submitted a supplemental brief, both in accordance with the court’s order. The motion to dismiss
was again submitted for consideration on April 18, 2014.
STATEMENT OF FACTS4
Allegations in the Complaint
Development of the Sutton Facility
Plaintiffs are conservation groups whose members recreate, fish and operate charter
fishing businesses on Sutton Lake, and who have had their use enjoyment of Sutton Lake reduced
by defendant’s discharges. Defendant is engaged in the generation, transmission, distribution and
sale of electricity. It is a North Carolina corporation headquartered in Raleigh. Defendant’s L.V.
Sutton Steam Electric Plant coal-fired electricity generating plant (“Sutton”) is located north of
Wilmington, and adjacent to Sutton Lake and the Cape Fear River. Defendant owns and operates
In 1971, North Carolina authorized, through statute and easement, defendant’s predecessor
to dam Catfish Creek, a navigable stream, in order to create the 1,100-acre Sutton Lake. Since then,
the lake has been managed by the North Carolina Wildlife Resources Commission (“WRC”) as a
public fishery. Sutton Lake is a popular fishing destination, frequented by sport and subsistence
fishermen for consumption. WRC manages the Sutton Lake fishery with financial support from
federal funds and grants from the U.S. Fish and Wildlife Service’s Sport Fish Restoration Program.
As explained below, the facts alleged in the complaint are taken as true for the purposes of evaluating the
adequacy of the complaint under Rule 12(b)(6). However, additional facts outside of the pleadings may be considered
by the court to determine if the case should be dismissed for lack of jurisdiction without converting the motion to dismiss
into one for summary judgment.
These entities encourage the public to fish at the Lake and recently renovated its boat ramps and
fishing pier to provide greater public access. North Carolina Department of Justice, in
correspondence attached to the complaint, suggested that Sutton Lake is a water of the state, as
defined under North Carolina law.5
Pursuant to its delegated authority under the CWA, 33 U.S.C. § 1342(b), DENR issued
National Pollutant Discharge Elimination System (“NPDES”) permit #NC0001422, effective
January 1, 2012, (the “Sutton NPDES permit”). The Sutton NPDES permit authorizes only one
point source discharge into the Cape Fear River from the Sutton Site. Defendant does not have a
NPDES permit for discharges into Sutton Lake.
The Sutton facility includes two coal ash settling lagoons, known as the Old Ash Pond
Area (approximately 54 acres, constructed in 1972) and New Ash Pond (approximately 82 acres,
constructed in 1984), which border Sutton Lake and discharge into it. The lagoons contain coal ash
stored in a wet state. Neither of the lagoons has a synthetic liner. A sinkhole opened beneath one
of the berms of the New Ash Pond in 2000, and there was a partial collapse and spill from another
of the New Ash Pond berms in 2010. EPA noted that some of the Old Ash Pond berms may be
constructed on a foundation of coal ash, as was the case with a 2008 Kingston, Tennessee, coal ash
spill. The berms of both Sutton coal ash lagoons have been given a “Significant” Hazard rating by
EPA based on the potential for economic and environmental losses due to a spill.
Waters of the State are defined as “any stream, river, brook, swamp, lake, sound, tidal estuary, bay, creek,
reservoir, waterway, or other body or accumulation of water, whether surface or underground, public or private, or
natural or artificial, that is contained in, flows through, or borders upon any portion of this state . . . .” N.C. Gen. Stat.
Discharges and Contamination
Defendant has dumped and is dumping polluted water from its coal ash lagoons directly
into Sutton Lake and its public fishery. These discharges include coal ash sluice water, coal pile
runoff, chemical metal cleaning wastes, and other wastewater. As a result, Sutton Lake has become
heavily contaminated with toxic pollutants including arsenic, selenium, mercury, antimony,
cadmium, chromium, lead and zinc; and other pollutants including sulfate, copper, ammonia,
nitrogen, phosphorus, iron, manganese, total dissolved solids, and total suspended solids.
Taking selenium as an example, decades of sampling reveal that concentrations in Sutton
Lake have increased dramatically over time, such that in recent years the selenium concentrations
in the surface water reached levels that cause reproductive failure of fish and waterfowl and have
far exceeded those levels in the lake sediments and in fish tissue itself. WRC determined that the
sediment and fish tissue concentrations of selenium represent a “High” hazard for reproductive
failure of fish and waterfowl. WRC staff commented that defendant has been withholding selenium
data from WRC, despite multiple requests for updated concentration information. Once selenium
levels reach a certain point, the fishery could be killed off entirely.
Selenium is also
bioaccumulative, meaning it is passed up the food chain in increasing concentrations, and excessive
amounts have been found in water snakes, small mammals, birds and humans.
As summarized by the parties, the Sutton NPDES permit treats discharges from the waste
streams of the coal ash lagoons into Sutton Lake as “internal outfalls” within a waste treatment
system.6 These discharges are termed “internal” in the permit because they are considered not to
Attached to the complaint is a document that appears to be a modified version of a permit for Sutton, but its
permit number does not match that alleged in the complaint (DE 1-8). The parties do not dispute the content of the
Sutton NPDES permit.
discharge to waters of the United States. Accordingly, the Sutton NPDES permit contains no limits
on the discharges to Sutton Lake for toxic pollutants such as selenium and arsenic. Thus, the permit
does not protect water quality in Sutton Lake.
In addition, defendant has allowed pollutants and coal ash materials to escape from its coal
ash lagoons into the groundwater at Sutton. These discharges are prohibited by the Sutton NPDES
permit. The resulting plume of contaminated groundwater is migrating towards drinking water
supply wells that provide drinking water to the community around Flemington Road. These
Flemington wells are located approximately half a mile from the Sutton coal ash lagoons. As
described in the complaint, a recent “Source Water Assessment Program Report” prepared by the
North Carolina Division of Environmental Health, Public Water Supply Section, for the water
system served by the Flemington wells assigned them an “Inherent Vulnerability Rating,”
“Contaminant Rating,” and “Susceptibility Rating” the highest risk ratings, and the report listed the
Sutton facility numerous times as a “Potential Contaminant Source” for these wells. The report also
confirms that many of the highly contaminated groundwater wells at Sutton are within the area that
contributes groundwater to the Flemington wells.
The contaminated groundwater at Sutton is also flowing directly into a canal that is
connected to and flows into Sutton Lake. As a result, the coal ash lagoons are discharging pollutants
into Sutton Lake via this hydrologic connection. Defendant had plans to retire its coal-fired
generating operation at Sutton by the end of 2013, but had not submitted a closure plan for the ash
lagoons to DENR and planned to leave the ash in place and continue using the ash lagoons to receive
waste streams and discharge into Sutton Lake. As long as the coal ash remains in these leaking
lagoons, it will continue to discharge pollutants into Sutton Lake and place the public fishery at risk
of a coal ash spill into the Lake.
Recent Developments at Coal Ash Facilities Statewide
Before plaintiffs filed complaint in this court, DENR sued defendant in state court, on
August 16, 2013, alleging violations of state environmental laws at Sutton and five other facilities
in North Carolina. State of North Carolina v. Duke Energy Progress, Inc., C.A. No. 13-CVS-11032,
Aug. 16, 2013, (Wake Co.). DENR notes in its complaint that groundwater sampling is required,
and groundwater standards, at or beyond the “Compliance Boundary” are alleged to be violated
pursuant to state law. Thus, the claims in DENR’s complaint before Wake County Superior Court
are different from the claims brought by plaintiffs in this case.
On February 10, 2014, the United States Attorney’s Office in the Eastern District of North
Carolina issued a subpoena to DENR requiring testimony before the court’s grand jury regarding
defendant’s Dan River facility, which discharges coal ash and wastewater to the Dan River and
recently had a catastrophic spill7 onsite. (DE 30-1). Defendant was also subpoenaed on that date.
On February 11, 2014, eighteen DENR employees were subpoenaed concerning payments or other
things of value they may have received from defendant or its related companies, and DENR was
subpoenaed again for personnel records of twenty current and former employees. (DE 30-2).
Notably, Sergei Chernikov is one of the employees subpoenaed and also the DENR contact person
for the Fact Sheet on the Sutton NPDES Permit. (DE 33-3).
On February 2, 2014, a stormwater pipe burst beneath the coal ash impoundment at defendant’s retired Dan
River Power Station near Eden, North Carolina. The coal ash flowed into the river for days, and leaked tens of thousands
of tons of coal ash and tens of millions of gallons of contaminated water, which polluted the river for at least 70 miles
through North Carolina and Virginia.
On February 18, 2014, DENR was subpoenaed for documents and information relating
to fourteen facilities owned by defendant, including Sutton. (DE 30-3). The February 18, 2014,
subpoena specifically seeks documents related to the activities of defendant and DENR and their
handling of the state court enforcement proceedings that includes the Sutton facility. Id. at 5, ¶16
(requesting “[a]ll documents, recordings, public records or other evidence relating to
communications between Duke Energy and NC DENR regarding the enforcement actions brought
by NC DENR in the following cases: State of North Carolina v. Duke Energy Carolinas, LLC, Case
No. 13 CVS 14611; State of North Carolina v. Duke Energy Progress, Inc., Case No. 13 CVS 11 032;
State of North Carolina v. Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc.,
Case No. 2013 CVS 4061; and State of North Carolina v. Duke Energy Carolinas, Case No. 13 CVS
9352. Records sought include any pre-filing correspondence with Duke Energy and/or its
subsidiaries as well as all drafts of proposed settlement agreements and all documents and
correspondence relating to the decision to revoke the proposed settlement in State of North Carolina
v. Duke Energy Carolinas, Case No. 13 CVS 9352”).
On February 20, 2014, DENR indicated that it was assembling a task force in response to
the Dan River ash spill, which would revisit the terms of a then-proposed consent order regarding
that site in state superior court. (DE 37-5). The consent order was subsequently withdrawn in that
case. (DE 40-6).
On February 28, 2014, DENR issued a Notice of Violation to Duke Energy-Dan River
Steam Station for its violations at the Dan River facility. (DE 33-1). In that notice, DENR cites
the discharge of coal ash pollutants from the ash pond at the Dan River facility into waters of the
state, and as a result claims a violation of the Removed Substances Permit Provision of that NPDES
permit. The Removed Substances Provision for the Dan River facility’s permit is one of the standard
conditions that is also contained in the Sutton NPDES permit.
On March 12, 2014, defendant responded to an inquiry from Governor Pat McCrory
regarding its recommendations for actions concerning coal ash basins in North Carolina. (DE 37-2).
DENR found this response to be inadequate, and on March 13, 2014, DENR issued two press
releases. First, DENR indicated that it plans to modify permits at three facilities, including Sutton.
(DE 39-1). Second, DENR claimed that defendant’s response to an information request on coal ash
facilities was inadequate, specifically listing Sutton as high-priority. (DE 39-3). On March 14,
2014, DENR sent defendant a notice of modification regarding the Sutton NPDES permit. (DE 403). That same day, DENR invited EPA to “partner with DENR in the responsible resolution of not
only the Dan River matter, but other environmental issues at the thirteen additional Duke Energy
sites in North Carolina.” (DE 40-4). On March 17, 2014, EPA responded that such a joint approach
was “a desirable way to proceed for both of our agencies,” and also suggested “crafting an over-all
solution to outstanding CWA concerns at Duke Energy facilities.” (DE 40-5).
Standard of Review
The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which
relief can be granted is to eliminate claims that are factually or legally insufficient. Fed. R. Civ. P.
12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). A claim is stated if the complaint contains “sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). In evaluating whether a claim is stated, “[the] court accepts all well-pled facts as
true and construes these facts in the light most favorable to the plaintiff,” but does not consider
“legal conclusions, elements of a cause of action, . . . bare assertions devoid of further factual
enhancement[,] . . . unwarranted inferences, unreasonable conclusions, or arguments.” Nemet
Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) (internal citations
A Rule 12(b)(1) motion challenges the court’s subject matter jurisdiction, and the plaintiff
bears the burden of showing that federal jurisdiction is appropriate when challenged by the
defendant. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Adams v.
Bain,697 F.2d 1213, 1219 (4th Cir. 1982). Such a motion may attack the existence of subject matter
jurisdiction in fact, apart from the complaint. Adams, 697 F.2d at 1219. In that instance, “the
district court is to regard the pleadings’ allegations as mere evidence on the issue, and may consider
evidence outside the pleadings without converting the proceeding to one for summary judgment.”
Richmond, F. & P. R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). The standard of
review, however, is the same as with a motion for summary judgment. Thus, “the nonmoving party
must set forth specific facts beyond the pleadings to show that a genuine issue of material fact exists.
The moving party should prevail only if the material jurisdictional facts are not in dispute and the
moving party is entitled to prevail as a matter of law.” Id. (internal citations omitted).
Jurisdictional Waters of the United States
Congress passed the CWA in 1972, “to restore and maintain the chemical, physical, and
biological integrity of the Nation’s waters.” 33 U.S.C. § 1251. The Act prohibits the discharge of
pollutants into “navigable waters” except as in compliance with the Act’s provisions. See 33 U.S.C.
§ 1311(a) (prohibiting the discharge of any pollutant); § 1362(12)(A) (defining “discharge of a
pollutant” as the addition of a pollutant into navigable waters).
The Act defines “navigable waters” as “waters of the United States, including the
territorial seas.” § 1362(7). The jurisdiction of the CWA is limited to the waters of the United
States. Whether a particular waterbody is jurisdictional as a water of the United States is a key
threshold question for determining whether a discharge into that water will require a permit under
Regulations of the EPA and the United States Army Corps of Engineers (“Corps of
Engineers” or “Corps”) provide that waters of the United States include “[a]ll waters which are
currently used, or were used in the past, or may be susceptible to use in interstate or foreign
commerce, . . . [a]ll other waters such as intrastate lakes, rivers, streams (including intermittent
streams), . . . the use, degradation, or destruction of which could affect interstate or foreign
commerce, [and] [a]ll impoundments of waters otherwise defined as waters of the United States. .
. . [W]aste treatment systems, including treatment ponds or lagoons designed to meet the
requirements of the CWA (other than cooling ponds . . .) are not waters of the United States.” 33
C.F.R. § 328.3(a); 40 C.F.R. § 230.3(s).
Thus, jurisdiction exists only where pollutants are discharged into a “water of the United
States.” The term “waters of the United States” encompasses more than traditionally navigable
waters. Indeed, the term is defined by the Corps of Engineers’ regulations to include not only
actually navigable waters but also tributaries of such waters as well as adjacent wetlands. See 33
CFR § 328.3(a).8 The regulations specify that “adjacent” means “bordering, contiguous, or
neighboring,” and that wetlands are “adjacent” even if separated from other waters by man-made
dikes or barriers, natural river berms, beach dunes and the like. § 328.3(c).
The parameters of jurisdiction under the Act has been examined in three major Supreme
Court cases. In Rapanos v. United States, 547 U.S. 715 (2006), the Supreme Court examined its
earlier interpretations of the term “navigable waters” in United States v. Riverside Bayview Homes,
Inc., 474 U.S. 121 (1985), and Solid Waste Agency of Northern Cook County v. United States Army
Corps of Engineers, 531 U.S. 159 (2001) (“SWANCC”), to determine whether wetlands “adjacent”
to traditional navigable waters fall within the federal regulatory authority of the CWA.
The Supreme Court first interpreted the phrase “waters of the United States” in Riverside
Bayview Homes. 474 U.S. 121. That case involved a wetland that extended beyond the boundary
“Waters of the United States” is defined fully to include:
(1) All waters which are currently used, or were used in the past, or may be susceptible to
use in interstate or foreign commerce, including all waters which are subject to the ebb and
flow of the tide;
(2) All interstate waters including interstate wetlands;
(3) All other waters such as intrastate lakes, streams (including intermittent streams)...
wetlands ... or natural ponds, the use, degradation or destruction of which could affect
interstate or foreign commerce including any such waters:
(I) Which are or could be used by interstate or foreign travelers for recreational or
other purposes; or
(ii) From which fish or shellfish are or could be taken and sold in interstate or
foreign commerce; or
(iii) Which are used or could be used for industrial purpose by industries in
(4) All impoundments of waters otherwise defined as waters of the United States;
(5) Tributaries of waters identified in paragraphs (1) through (4);
(6) The territorial seas;
(7) Wetlands adjacent to waters (other than waters that are themselves wetlands) identified
in paragraphs (1) through (6).
33 CFR § 328.3(a).
of the respondent’s property to a navigable waterway. Id. at 131. Noting that “the transition from
water to solid ground is not necessarily or even typically an abrupt one,” and that there is necessarily
some difficulty in determining where the water ends and the land begins, the Court upheld the Corps
of Engineers’ interpretation of “waters of the United States” to include wetlands that “actually abut
on” traditional navigable waters. Id. at 135.
Following the Court’s decision in Riverside Bayview, the Corps of Engineers adopted
increasingly broad interpretations of its regulations. In SWANCC, the Court examined the Corps’
so-called “Migratory Bird Rule,” which purported to extend jurisdiction under the Act to any
intrastate waters “which are or could be used as a habitat” by migratory birds. 531 U.S. at 163-64.
In that case, the Corps applied the Migratory Bird Rule to regulate an abandoned sand and gravel
pit in northern Illinois. Id. at 162. The Court determined that the Corps had gone too far, observing
that “it was the significant nexus between the wetlands and ‘navigable waters’ that informed our
reading of the CWA in Riverside Bayview.” Id. at 167. The Court held that non-navigable, isolated,
intrastate waters which did not actually abut on a navigable waterway were not included as “waters
of the United States.” Id.
Rapanos v. United States
In Rapanos, 547 U.S. 715, which involved two consolidated cases, the Supreme Court
delivered its most recent interpretation of “waters of the United States,” this time in the context of
adjacent wetlands. The cases involved four separate wetlands, all near ditches or man-made drains
that eventually emptied into traditional navigable waters. In both cases, the Sixth Circuit concluded
that the wetlands were covered by the CWA. Id. at 729-30. The Supreme Court consolidated the
cases and granted certiorari to decide whether the wetlands actually constituted “waters of the
United States” under the CWA. The Supreme Court vacated the Sixth Circuit and remanded the
cases for reconsideration in light of the appropriate legal standard. Id. at 757.
The Court itself, however, could not agree on the appropriate legal standard, and issued
a split decision. Although there are five written opinions which make up the Rapanos decision, the
three major opinions are: (1) the plurality opinion authored by Justice Scalia and joined by Chief
Justice Roberts together with Justices Thomas, and Alito; (2) Justice Kennedy’s concurring opinion;
and (3) the dissenting opinion authored by Justice Stevens and joined by Justices Souter, Ginsburg,
Justice Scalia, in writing for the plurality, advocated a newly restrictive approach to
jurisdictional determinations under the CWA. Under this approach:
The phrase “the waters of the United States” includes only those
relatively permanent, standing or continuously flowing bodies of
water “forming geographic features” that are described in ordinary
parlance as “streams, oceans, rivers, and lakes.” The phrase does not
include channels through which water flows intermittently or
ephemerally, or channels that periodically provide drainage for
Id. at 739 (internal citations omitted). The plurality explained, however, that “[b]y describing
‘waters’ as ‘relatively permanent,’ we do not necessarily exclude streams, rivers, or lakes that might
dry up in extraordinary circumstances, such as drought. We also do not necessarily exclude
seasonal rivers, which contain continuous flow during some months of the year but no flow during
dry months.” Id. at 733, n. 5.
Further, the plurality addressed the circumstances under which a wetland may be
considered “adjacent to” waters of the United States, concluding that:
[O]nly those wetlands with a continuous surface connection to bodies that are
“waters of the United States” in their own right, so that there is no clear demarcation
between “waters” and wetlands, are “adjacent to” such waters and covered by the
[CWA]. Wetlands with only an intermittent, physically remote hydrologic
connection to “waters of the United States” do not implicate the boundary-drawing
problem of Riverside Bayview, and thus lack the necessary connection to covered
waters that we described as a “significant nexus” in SWANCC.
Id. at 742.
Therefore in sum, under the plurality’s approach, establishing that wetlands are covered
by the CWA requires two findings. Id. First, the adjacent channel must itself contain a water of the
United States (i.e., a relatively permanent body of water connected to traditional interstate navigable
waters). Id. Second, the wetland must have a continuous surface connection with that water,
making it difficult to determine where the “water” ends and the “wetland” begins. Id.
Justice Kennedy concurred in the plurality’s decision to remand the case. Id. at 759. He
advocated, however, an entirely different approach for establishing whether wetlands come within
the Corps’ jurisdiction under the CWA:
[T]he Corps’ jurisdiction over wetlands depends upon the existence of a significant
nexus between the wetlands in question and navigable waters in the traditional sense
. . . wetlands possess the requisite nexus, and thus come within the statutory phrase
“navigable waters,” if the wetlands, either alone or in combination with similarly
situated lands in the region, significantly affect the chemical, physical, and biological
integrity of other covered waters more readily understood as “navigable.” When, in
contrast, wetlands’ effects on water quality are speculative or insubstantial, they fall
outside the zone fairly encompassed by the statutory term “navigable waters.”
Id. at 779-80.
Justice Kennedy found the plurality’s approach too limiting of the Corps’ jurisdiction,
identifying two limitations which the plurality proposed with which he disagreed. First, Justice
Kennedy disagreed with the plurality’s conclusion that the phrase “navigable waters” includes only
“relatively permanent, standing or flowing bodies of water.” Id. at 768-69. He found that this
limitation made little sense in view of Congress’ concern with downstream water quality, and that
jurisdiction should exist where intermittent water flow impacts downstream water quality, even if
the flow of water is not relatively permanent. Id. at 769. Second, Justice Kennedy disagreed with
the plurality’s assertion that wetlands fall within the CWA only if they bear a “continuous surface
connection” to bodies that are waters of the United States in their own right. Id.
The four dissenting justices would have upheld the broad interpretation of jurisdiction
under the CWA and concluded that the wetlands at issue were “waters of the United States.” Id. at
810. Justice Stevens observed that although the plurality and Justice Kennedy agreed that remand
was appropriate, their opinions set forth different tests for the appropriate test to apply on remand.
Id. He then concluded that, because all four dissenting justices would have upheld jurisdiction
where either the plurality’s test or Justice Kennedy’s tests were satisfied, jurisdiction should in the
future be upheld if either of those tests is satisfied. Id.
The Governing Rule of Rapanos
After Rapanos was decided, the Corps of Engineers and the EPA issued memorandum
providing guidance to EPA regions and Corps districts implementing Raponos (“Raponos
Guidance”), to address the jurisdiction of the CWA over waters of the United States.9 The Raponos
Guidance explains that post-Rapanos, the agencies would evaluate whether either the plurality’s
relatively permanent waters standard or Justice Kennedy’s significant nexus standard was satisfied,
The version of the Rapanos Guidance described here, is the updated version dated December 2, 2008. The
Guidance is available on the Corps' website. See U.S. Envt'l Prot. Agency & U.S. Army Corps of Eng'rs, Clean Water
Act Jurisdiction Following the U.S Supreme Court's Decision in Rapanos v. United States & Carabell v. United States
(Dec. 2, 2008), available at
and that either test would satisfy a finding of waters of the United States. Rapanos Guidance 3. The
Fourth Circuit has affirmed this view in an unpublished opinion. See Deerfield Plantation Phase
II-B Prop. Owners Ass'n v. United States Army Corps of Eng'rs, 501 F. App’x 268, 275 (4th Cir.
2012); see also Precon Dev. Corp. v. United States Army Corps of Eng'rs, 633 F.3d 278, 288 (4th
Cir. 2011) (skirting the issue of whether both tests applied where the parties agreed to use the
significant nexus standard, but also relying on the agencies’ Rapanos Guidance). With this
background in law, the court turns now to the issues before it.
Waters of the United States at Sutton
Plaintiff asserts three claims for violations of the CWA: unauthorized surface discharges
into Sutton Lake (Count I), unlawful entering of removed substances into state waters and navigable
waters of the United States (Count II), and discharges through close hydrologic flow into Sutton
Lake (Count III). As to Count I and Count III, defendant contends that Sutton Lake is not a water
of the United States protected by the CWA, and so there is no violation by discharging into the
lake.10 As to Count II and Count III, defendant contends that groundwater is not a water of the
United States, either. The court addresses each contention in turn below.
Plaintiffs allege that Sutton Lake was created by damming a navigable creek that flows
into the Cape Fear River. Sutton Lake was created with authorization for defendant to use it as a
cooling water reservoir, and managed as a public fishery with boat ramp for public access.
Defendant argues that because DENR treats Sutton Lake as a cooling pond through its permits, it
is not a water of the United States. However, this argument is not convincing, particularly where
Although defendant casts its argument regarding Sutton Lake as a failure to state a claim, the court examines
it together with groundwater as a jurisdictional question pursuant to the CWA.
defendant has other public lakes used as cooling reservoirs for other power plants, which are
classified and treated as waters of the United States. Compl. ¶ 45. Sutton Lake falls squarely within
“conventionally identifiable waters,” and may be “described in ordinary parlance” as a lake.
Rapanos, 547 U.S. at 734, 739. Thus, plaintiffs have alleged sufficient facts to find Sutton Lake is
a water of the United States subject to CWA jurisdiction.
The court turns next to the issue of regulating groundwater pursuant to the CWA. The
CWA does not generally require NPDES permits for discharges to groundwater or wells. Courts
have excluded from the CWA “isolated/tributary groundwater,” such as confined wells. See, e.g.,
Exxon Corp v. Train, 554 F.2d 1310, 1329 (5th Cir. 1977). Some courts have held that an NPDES
permit is not required for discharges to groundwater even if those discharges eventually migrate to
surface waters. See, e.g., D.E. Rice v. Harken Exploration Co., 250 F.3d 264, 269 (5th Cir. 2001);
Village of Oconomowoc Lake v. Dayton Hudson Corp., 24 F.3d 962, 965 (7th Cir. 1994).11 These
courts rely heavily on the CWA’s statutory history and agency interpretation. For example, the
Seventh Circuit concluded that “[n]either the [CWA] nor the EPA’s definition [of waters of the
United States] asserts authority over ground waters, just because they may be hydrologically
connected with surface waters.” Village of Oconomowoc Lake, 24 F.3d at 965.
By contrast, some courts have found that NPDES permits are required when discharges
to groundwater result in the migration of pollutants to hydrologically connected surface waters. See,
See also United States v. Johnson, 437 F.3d 157, 161 n.4 (1st Cir. 2006)(recognizing that “the CWA does
not cover any type of ground water” where ground water is regulated by other statutes), vacated and remanded on other
grounds by United States v. Johnson, 467 F.3d 56 (1st Cir. 2006); Cordiano v. Metacon Gun Glub, Inc., 575 F.3d 199,
223 n.6 (2nd Cir. 2009)(recognizing authority for the assertion that the CWA does not apply to ground water without
reaching the issue).
e.g., Hernandez v. Esso Std. Oil Co., 599 F. Supp. 2d 175, 180 (D.P.R. 2009). These courts rely on
the view that Congress intended to regulate the discharge of pollutants into surface waters of the
United States, whether the pollutants reach the surface water directly or through groundwater. See
id. See also 66 Fed. Reg. 2960, 3015 (Jan. 12, 2001) (“EPA is restating that the Agency interprets
the Clean Water Act to apply to discharges of pollutants from a point source via ground water that
has a direct hydrologic connection to surface water.”). It appears that the Fourth Circuit has not
addressed this jurisdictional issue.
The plurality holding in Rapanos repeatedly admonishes the lower courts and the Corps
for attempting to expand the definition of navigable waters to encompass virtually all water,
regardless of its actual navigability, location, or consistency of flow. Rapanos, 547 U.S. at 733-34.
The Supreme Court also reiterates that, in Riverside Bayview, it held that the phrase “waters of the
United States” “referred primarily to ‘rivers, streams, and other hydrographic features more
conventionally identifiable as waters’ than the wetlands adjacent to such features.” Id. at 734
(quoting Riverside Bayview, 474 U.S. at 131) (emphasis omitted). “Likewise, in both Riverside
Bayview and SWANCC, [the Supreme Court] repeatedly described the ‘navigable waters’ covered
by the [CWA] as ‘open water’ and ‘open waters.’” Id. at 735 (citations omitted).
After close review of the competing analyses, this court finds the reasoning of the Court
of Appeals for the Seventh Circuit persuasive, and holds that Congress did not intend for the CWA
to extend federal regulatory authority over groundwater, regardless of whether that groundwater is
eventually or somehow “hydrologically connected” to navigable surface waters. There is support
for this holding in both the language and legislative history of the CWA and in the Supreme Court’s
ruling in Rapanos. In Rapanos, the Court does not endorse a broad interpretation of the term
navigable waters, and sets forth tests that will exclude some wetlands from the scope of the CWA.
Thus, this court is satisfied that groundwater (which is even less fairly described as “open water”
or a conventionally understood hydrographic or geographic “feature” than any wetland) does not
fall within the meaning of the statute.12 Therefore, plaintiffs’ groundwater claims13 are dismissed
for lack of subject matter jurisdiction under the CWA.
Sutton NPDES Permit
Defendant contends that the Sutton NPDES permit precludes liability here under the
CWA, to which plaintiffs respond that defendant cannot be shielded from liability since it has
violated the permit. Defendant further contends that plaintiff’s complaint is nothing more than an
impermissible collateral attack on the NPDES permit, which plaintiffs also contest.
In 1972, Congress passed a comprehensive revision and recodification of the CWA, which
established the NPDES permit program. 33 U.S.C. § 1342, CWA § 402. Dischargers to waters of
the United States must obtain and comply with a permit under the NPDES program. Id. This
program allows states to administer permits under the supervision of the EPA. 33 U.S.C. § 1342(b),
CWA § 402(b).
As a general rule, compliance with a permit constitutes compliance with the CWA. 33
U.S.C. § 1342(k), CWA § 402(k). This is referred to as the “permit shield,” and operates with few
exceptions. See 40 C.F.R. § 122.5 (listing exceptions to the permit shield). In this case, plaintiffs
Of course, state laws may be more stringent than the floor of the CWA and regulate ground water as part of
their permitting processes.
The groundwater claims are all of Count III and parts of Count II that rely on discharges into groundwater
as opposed to discharges into Sutton Lake. See Compl.¶¶ 78-92.
allege that defendant violated the Sutton NPDES permit’s Removed Substances provision,14 in
addition to violating state and federal laws, by discharging into Sutton Lake and the groundwater.15
Taking those factual allegations as true, plaintiffs have alleged discharges not authorized by the
permit, and therefore it cannot shield defendant from liability.
Plaintiffs argue in the alternative that the Sutton NPDES permit violates the CWA by not
treating Sutton Lake as a water of the United States. The court has found that there are sufficient
factual allegations in the complaint to find Sutton Lake is a water of the United States. See supra
Part C.1.a. Therefore, the permit may violate the CWA. Defendant contends that plaintiffs should
have challenged the permit administratively instead of bringing a CWA case in federal court if they
believe the permit did not treat Sutton Lake as a water of the United States, citing a string of cases
under the Clean Air Act.
Courts which have examined this issue under the CWA do not require administrative
appeals in citizen suits where the state agency fails to uphold fundamental requirements of the
CWA. See, e.g., Dubois v. United States Dep’t of Agric., 102 F.3d 1273, 1300 (1st Cir. 1996)
(“[T]he CWA provides a federal floor, not a ceiling, on environmental protection. If a state seeks
to approve a standard that is less stringent than the federal CWA’s floor, or seeks to apply a standard
in a way that is otherwise invalid under federal law, then federal agencies and federal courts are
obligated to resolve the application of the federal CWA in any case that properly comes before
As DENR similarly found at the Dan River Facility, a discharge from a coal ash pond into a water of the
United States is a violation of the Removed Substances provision of an NPDES permit, which provides:
Solids, sludges, filter backwash, or other pollutants removed in the course of treatment or control of
wastewaters shall be utilized/disposed of in accordance with NCGS 143-215.1 and in a manner such
as to prevent any pollutant from such materials from entering waters of the State or navigable waters
of the United States except as permitted by the Commission.
The issue of groundwater regulation under the CWA is examined supra Part B.2.b.
them.”). Thus, plaintiffs’ complaint has alleged sufficient facts to state a claim under Rule 12(b)(6),
except for groundwater claims which lack jurisdiction as discussed above.
Diligent Prosecution Bar
The court next examines defendant’s argument that the court lacks jurisdiction because
there is a diligent prosecution ongoing. The CWA prohibits citizens from bringing suit when either
the federal or state government is “diligently prosecuting” a civil or criminal action regarding the
same violations. 33 U.S.C. §§ 1365(b)(1)(B), 1319(g)(6). Courts have construed the diligent
prosecution bar narrowly to prevent violators from escaping liability. See Washington Pub. Interest
Research Group v. Pendleton Woolen Mills, 11 F.3d 883, 886 (9th Cir. 1993); Student Public
Interest Research Group of New Jersey v. Fritzsche, Dodge & Olcott, 759 F.2d 1131 (3d Cir. 1985).
Agency enforcement action must have been instituted before the citizen suit is brought. Long Island
Soundkeeper Fund, Inc. v. New York City Dep’t of Envtl. Protection, 27 F. Supp. 2d 380 (E.D.N.Y.
1998); Sierra Club v. Hundai America, Inc., 23 F. Supp. 2d 1177 (D. Or. 1997); Mass Pub Int.
Research v. ICI Americas Inc., 777 F. Supp. 1032, 1036 (D. Mass. 1991). Furthermore, a state
prosecution does not bar a citizen suit if the state law is not comparable to the federal CWA. See
33 U.S.C. 1919(g)(6)(A)(ii); North Carolina Shellfish Growers Ass’n v. Holly Ridge Assocs., Inc.,
200 F. Supp. 2d 551, 557 (E.D.N.C. 2001) (finding CWA citizen suit not barred where state had
brought enforcement action under state law). A pending state administrative action or permit also
does not bar a citizen suit. See, e.g., Black Warrior Riverkeeper, Inc. v. Birmingham Airport Auth.,
548 F.3d 986, 992 (11th Cir. 2008) (no preemption where citizens filed complaint at end of notice
period and where state submitted draft unilateral consent order to defendants prior to notice period
In this case, not only does the complaint in state court address different claims than those
before this court, but the state laws being enforced concerning compliance boundaries for
groundwater contamination are different than the CWA laws upon which plaintiffs rely here. The
court would also be remiss to bar suit based upon pending state administrative actions where they
do not bar citizen suits, and where, in this case, there have been allegations of possible improper
influence. Dismissal for lack of jurisdiction on the basis of diligent prosecution is not warranted.
Based upon the foregoing, the court GRANTS IN PART defendant’s motion where it
moves to dismiss plaintiff’s groundwater-related claims for lack of jurisdiction, and DENIES IN
REMAINING PART the motion to dismiss (DE 15). Plaintiffs’ motions seeking permission to
inform the court are DISMISSED AS MOOT (DE 28, 32).
In accordance with the court’s November 15, 2013, order, the stay on discovery is hereby
lifted. With reference to the court’s initial order regarding planning and scheduling, entered
November 6, 2013, the parties shall conduct the Rule 26(f) conference within twenty-one (21) days
from entry of this order and adhere to other requirements therein set out. If either side determines
a conference by telephone with the court in advance of entry of the case management order is
appropriate, that information shall be included in the parties’ joint report.
SO ORDERED, this the 9th day of June, 2014.
LOUISE W. FLANAGAN
United States District Court Judge
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