S.D. Warren Co. v. Maine Bd. of Environmental Protection (05/15/2006)

Question presented: 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?

BY GABRIEL C. ROTH & CLAIR WINDSOR, MEDILL NEWS SERVICE

How the U.S Supreme Court interprets one word in the 28-year-old Clean Water Act could mean the difference of hundreds of thousands of dollars for a company operating hydropower dams in Maine.

The S.D. Warren Co., which owns five dams along the state's Presumpscot River, is at odds with the state's Board of Environmental Protection over a dam licensing process, which occurs every 20 years. Warren is a subsidiary of Johannesburg-based Sappi, Ltd., which is the world's largest producer of coated fine paper and chemical cellulose. It built its dams along the Presumpscot River decades ago to run paper mills.

The Federal Energy Regulatory Commission controls the licensing of dams, but pursuant to the Clean Water Act of 1977, states can participate in the licensing process if they have concerns about the quality of water passing through the dams. A conflict can arise, however, when federal and state water quality standards differ, and such is the case in Maine.

With its dam licenses expiring in 1999, Warren began performing water quality and biodiversity tests in 1996 in preparation for recertification. Despite consulting with state groups, the company wanted to let the federal government through the FERC regulate the water because, it claims, the state would place too many obstacles before the company and make renewing its licenses more difficult and more expensive.

"The S.D. Warren Co. is trying to rewind the clock by saying only FERC can make decisions regarding these dams," said Carol Blasi, an assistant attorney general of Maine who is filing a brief before the Supreme Court on behalf of the Maine Board of Environmental Protection.

The Maine BEP would require, for example, that Warren's dams include fish passages for Atlantic salmon and other indigenous fish species. The board has also recommended that the dams run on a different operating schedule.

Not allowing states to have a part in the relicensing process would be unsettling for environmentalists.

"If we don't have this right (to oversee dam relicensing), it means that FERC could reissue licenses that contradict with Maine water quality standards," said Dana Murch, the dams and hydropower supervisor of the BEP.

"This is the most important hydropower case in 50 years," he added.

While the case presents a number of states' rights and environmental issues, the Supreme Court is being asked to interpret the word "discharge" in Sections 401 and 402 of the Clean Water Act. This word and its modifiers have been the focus of litigation in North Carolina, Florida and, most recently, Maine.

Citing Section 402, which equates "discharge" with "pollutants," Warren claims that the word only refers to harmful materials added to the river water.

Citing Section 401, the BEP claims that "discharge" refers to any water that flows through a dam—a process that changes the water's status from public to private (while running through the dam) back to public. A change in status, the BEP claims, means that all dam water is discharge.

If the Court finds that there is discharge in the river, that would trigger the Section 401 certification requirement and would give Maine a say in the dam relicensing project.

In South Florida Water Management District v. Miccosukee, the Supreme Court said in 2004 that "discharge" refers to pollutants. But the Maine Supreme Judicial Court and the BEP contend that that definition refers to Section 402 of the CWA and not Section 401—the part of the CWA that could trigger state oversight.

In February 2005, the Maine Supreme Judicial Court voted unanimously to uphold the BEP's regulatory power in the dam relicensing process. Justice Paul Rudman wrote, "Warren is not adding water to the river. However, a discharge results because Warren's dams remove the water of the river from its natural course, exercise private control over the water and then add the water back to the river."

That change in status, the court held, is enough to trigger Section 401 and state oversight.

The Maine Supreme Judicial Court erred in its definition of "discharge" and created a completely new precedent in its decision, said Martin Newhouse of the New England Legal Foundation, which supports advancing free enterprise principles, in its brief on behalf of Warren.

"The SJC's reasoning would lead to absurd results," he wrote. "It would mandate…that an ‘addition' has occurred even where a dam's operation actually reduces the volume of water in a river."

On Oct. 11, 2005, the U.S. Supreme Court accepted the case for review, limited to the first question of Warren's petition for certiorari concerning the definition and implications of the word "discharge."

Legal analysts have said that the case could give insight into how newly-appointed Chief Justice John Roberts looks at environmental and states' rights issues, while power companies are rallying around Warren in hopes that the Supreme Court will allow FERC to relicense the dams without state directives.

During the Court's oral arguments on Feb. 21, 2006, the justices questioned whether the five dams along the Presumpscot River owned by Warren create "discharge" as it is defined by section 401 of the Clean Water Act a 2004 Supreme Court ruling.

William J. Kayatta argued on behalf of Warren that the five dams did not compromise the Presumpscot River as a single body of water as defined by the Court in 2004 in South Florida Water Management District v. Miccosukee. He argued that a single river could not discharge into itself because the river was following the natural, downward flow of the single body of water with no pollutants added to the river as was the case in Miccosukee.

Justice Anthony Kennedy questioned the effect the disrupted water flow would have on the rivers chemical composition.

"When the water stays in the impoundment area [there] is stratification, and the oxygen components at different levels change, so that when the water goes back into the dam, it's qualitatively different," Justice Kennedy said. "And that sounds to me like discharge."

Kayatta agreed, saying the water's chemical composition changed slightly in the impoundment area and not during the process of moving through the dams. He argued that because the dams were not creating the chemical change, the dams were not creating discharge.

Justice Stevens restated that the chemical change in the water did not take place while it passed through the dams, but the change in the water took place because of the dam.

Kayatta agreed, saying, "It is the impoundment that changes the nature of the water."

Kayatta argued that because the chemical alteration took place in the impoundment areas above the dams, the water exiting the dam was chemically the same as the water that proceeded through the dam. Therefore, Kayatta said, the exiting water was entering the river below with the same chemical composition and not creating discharge.

Arguing for the state, Maine Attorney General Steven Rowe said section 401 of the Clean Water Act defines discharge as "the flowing or issuing out" of water, which he contended Warren's dams were doing.

Rowe said discharge is defined by whether the "biological integrity [of the water] has been compromised" and effects the aquatic ecosystems, as had been the ruling in Miccosukee.

The Miccosukee ruling established that in a case where there is "pollution" from an outside source there is discharge.

"The ‘pollution', as it is defined in the Clean Water Act, is the alteration of the physical, chemical, and biological integrity of the water," Rowe said.

Justice Antonin Scalia said this case differs because it is a single source running into itself and therefore the discharge cannot come from an outside source but rather from itself.

Chief Justice John Roberts questioned whether a stick thrown into a river would create discharge because it would force the flow of water around the stick.

Justice Scalia argued that it would depend on the size of the river whether the effect of a stick in a river would constitute discharge.

Justice Scalia then said that, "any significant obstruction in the river [creates a discharge]," and he remarked that is was odd to him that a river could discharge into itself.

Jeffery P. Minear argued for the U.S. in support of the Maine State Board of Environmental Protection.

"It is clear that the term ‘discharge' is broader then the term ‘discharge of a pollutant' and does not include the requirement of an addition," Minear said.

He went onto say that this case was unique because they were talking about discharge without the addition of a foreign pollutant.

The argument is whether the chemical changes that happen naturally from the water being held in impoundment areas are creating the discharge of distinctly different river water were the dams not in place.

Minear argued that it is important that states have a say in whether their water quality standards are met along with the federal standards set by the Clean Water Act.

On May 15, 2006, the Court sided with Maine, holding that hydroelectric dams require state certification that water protection laws will not be violated for purposes of licensing under the federal Clean Water Act. Justice David Souter wrote the Court's lead opinion.