United States District Court, D. South Carolina, Columbia Division
Carolina Water Service Inc, Plaintiff, represented by Chad
Nicholas Johnston, Willoughby and Hoefer.
Carolina Water Service Inc, Plaintiff, represented by John
Marion S. Hoefer, Willoughby and Hoefer & Randy Lowell,
Willoughby and Hoefer.
Administrator Regina McCarthy, Defendant, represented by Beth
Drake, U.S. Attorneys Office & Michael C. Augustini, U.S.
Department of Justice, pro hac vice.
States Environmental Protection Agency, Defendant,
represented by Beth Drake, U.S. Attorneys Office & Michael C.
Augustini, U.S. Department of Justice, pro hac vice.
of Lexington South Carolina, Defendant, represented by J.
David Black, Nexsen Pruet Jacobs and Pollard, Joan Wash
Hartley, Nexsen Pruet, William Thomas Lavender, Jr., Nexsen
Pruet Jacobs and Pollard, J. David Black, Nexsen Pruet Jacobs
and Pollard, Joan Wash Hartley, Nexsen Pruet & William Thomas
Lavender, Jr., Nexsen Pruet Jacobs and Pollard.
Carolina Water Service Inc, Counter Defendant, represented by
Chad Nicholas Johnston, Willoughby and Hoefer, John Marion S.
Hoefer, Willoughby and Hoefer & Randy Lowell, Willoughby and
OPINION AND ORDER
MARGARET B. SEYMOUR, Senior District Judge.
matter is currently before the court for three motions: (1) a
motion to dismiss filed by Defendant United States
Environmental Protection Agency and Regina McCarthy, in her
capacity as Administrator of the United States Environmental
Protection Agency (collectively hereinafter "EPA")
(ECF No. 24); (2) a motion to dismiss the counterclaim filed
by Carolina Water Service, Inc. ("Plaintiff" or
"CWS") (ECF No. 32); and (3) a motion for summary
judgment filed by the Defendant Town of Lexington, South
Carolina ("Town") (ECF No. 40). As explained below,
the court dismisses CWS's action against the EPA for
failure to state a claim upon which relief may be granted,
and dismisses CWS's action against the Town and the
Town's counterclaim for lack of subject matter
claims in this case arise out of an ongoing dispute
concerning the continued discharge of wastewater into South
Carolina's Lower Saluda River from a CWS-owned regional
wastewater treatment plant ("I-20 Plant"). CWS is a
privately-owned company that is a "public utility, as
defined by S.C. Code Ann. Â§Â§ 58-3-5(6) and 58-5-10(4), and is
authorized by a certificate of public convenience and
necessity issued by the Public Service Commission of South
Carolina (PSC') to provide wastewater collection and
treatment services to customers in various areas in the State
of South Carolina, including portions of Lexington County,
South Carolina." ECF No. 1 at Â¶ 1. The Central Midlands
Council of Governments ("CMCOG"), a board
consisting of elected officials, administrators, and
appointees from local counties, towns, and cities, is tasked
with conducting water quality planning and management for the
Midlands region of South Carolina. ECF No. 24-1 at 12.
CWS's I-20 Plant is located in the Town and is within
CMCOG's region. Id.
1979, pursuant to Section 208 of the Clean Water Act
("CWA"),  33 U.S.C. Â§ 1288, CMCOG drafted its
original "208 Plan, " a waste treatment and water
quality plan for the Midlands area. Since then, the 208 Plan
has been regularly amended. Under the current plan, the Town
is the "Designated Management Agency (hereinafter
DMA') and also the regional provider of wastewater
collection and transportation services in a portion of the
Midland's South Carolina region." ECF No. 1 at Â¶ 4.
The 208 Plan is subject to the review and approval of the
South Carolina Department of Health and Environmental Control
(DHEC), which the EPA authorized South Carolina to create in
1975. ECF No. 24-1 at 13. DHEC is the permitting agency for
National Pollutant Discharge Elimination System (NPDES)
permits in South Carolina. Id. The NPDES program
helps "regulate wastewater discharges from, among
other things, sewage treatment plants in the State."
November 1994, "DHEC issued to CWS NPDES Permit
SC0035564, which authorizes CWS to operate and discharge
wastewater from the I-20 Plant into the Lower Saluda River
subject to the terms and conditions of the permit." ECF
No. 1. In accordance with the 208 Plan's requisite to
eliminate discharges from small treatment facilities, the
NPDES permit required the I-20 system to be connected to a
regional facility when one became operational. An update to
the 208 Plan in 1997 continued to require the I-20 Plant to
connect with a regional wastewater facility when available.
ECF No. 1 at Â¶ 31. In 1999, the "Town finished
construction on the regional sewer line and received a Permit
to Operate from DHEC." Id. at Â¶ 30. CWS alleges
that since the completion of this facility in 1999, CWS has
"proactively sought to address the discharge elimination
requirement" but "each of those attempts have been
rejected and interconnection remains unavailable to
CWS." Id. at Â¶ 31.
an interconnection agreement, discharge of wastewater into
the Lower Saluda River continues. As a result, on January 14,
2015, Congaree Riverkeeper, Inc. ("CRK"), a South
Carolina environmental advocacy group, brought a citizen suit
pursuant to the CWA Â§ 505, 33 U.S.C. Â§ 1365, against CWS for
(1) a violation of CWS's NPDES permit condition requiring
connection of the facility to the regional system; (2) a
violation of the relevant 208 Plan, issued pursuant to CWA Â§
208, 33 U.S.C. Â§ 1288, which also requires connection of the
facility to the regional system; and (3) a violation of the
NPDES permit conditions regarding effluent limitations and
other standards. See Congaree Riverkeeper, Inc. v.
Carolina Water Service, Inc. (Case No. 3:15-CV-194-MBS).
contends that it is unable to reach an agreement because
there is a regional treatment facility, located in Cayce,
South Carolina, that is subject to a contractual Water
Services Agreement ("Agreement") between the City
of Cayce, the Town, and the Lexington County Joint Municipal
Water and Sewer Commission. CWS alleges that as part of the
Town's purchase of part of this regional treatment
facility, the Town covenanted to not enter into any contract
or agreement (including an interconnection agreement) to
treat wastewater generated by private wastewater utility
entities, such as CWS. Furthermore, CWS alleges that the
"bonds issued by the Town to finance its investment in
the available allocated treatment and discharge capacity of
the City of Cayce's [regional treatment facility]
restrict the receipt and/or quantity of wastewater generated
by privately-owned... utilities, " such as CWS. ECF No.
25 at Â¶ 45(a).
August 1, 2016, DHEC denied renewal of CWS's I-20 Plant
NPDES permit, with orders that give "the Town of
Lexington and CWS 60 days to submit a coordinated plan to
DHEC detailing how CWS will interconnect the wastewater
discharge from the I-20 plant to Lexington's sewer
system. Within 12 months, CWS must complete the tie into the
Lexington sewer system, shut down the I-20 facility and
eliminate discharge into the Saluda River." DHEC
Denies CWS I-20 Plant Permit and Orders Town of Lexington and
CWS to Eliminate Discharge into Saluda River, South
Carolina Department of Health and Environmental Control
(August 1, 2016),
DHEC had previously announced its intention to deny CWS a new
NPDES permit. ECF No. 24-1. DHEC reasoned that CWS is
ineligible for a permit because "the regional system is
operational and CWS therefore must connect to a regional
sewer system or other treatment facility." Id.
at 15 (citation omitted).
December 11, 2015, CWS filed a complaint against EPA and the
Town alleging violations of the CWA, and seeking declaratory
judgment or in the alternative, injunctive relief. ECF No. 1.
Specifically, inter alia, CWS seeks the following.
(1) Declaratory judgment against EPA finding that
"EPA's approval of the annual certifications of the
1997 208 Plan is in violation of Section 208 and is therefore
no longer valid to the extent that it recognizes as a DMA an
entity lacking the requisite authority to act as such (
i.e., the Town)." Id. at Â¶ 54(A).
(2) Declaratory judgment against the Town for allegedly
entering into the Agreement, which restricts the Town's
ability to fulfill its duties under the CWA and the 1997 208
Plan. Additionally, CWS wants the court to find that the Town
is in violation of the CWA and the 1997 208 Plan because it
has refused to offer interconnection to CWS's I-20 system
to allow compliance with the 1997 208 Plan.
(3) Injunction of the 1997 208 Plan to the extent that the
Town serves as DMA for the region or for an order enjoining
the Town to offer interconnection to the I-20 system under
the terms advanced by CWS and currently pending before the
Procedural History-CWS and EPA
February 11, 2016, EPA filed a motion to dismiss, arguing
that the lawsuit is barred as to EPA by sovereign immunity,
and that CWS failed to provide adequate notice to the EPA
prior to filing suit. ECF No. 24. On February 15, 2016, CWS
filed an amended complaint adding the Administrative
Procedure Act, 5 U.S.C. Â§Â§ 701 et seq. ("APA"), as
a basis for the court's jurisdiction. ECF No. 25.
March 10, 2016, pursuant to a court order establishing a
revised briefing schedule (ECF No. 27), EPA filed a
supplement to its motion to dismiss. ECF No. 30. EPA's
supplement counters, among other things, that CWS's APA
argument is a "bare reference to the APA"; and is
otherwise inapplicable because the challenged actions are
committed to agency discretion. ECF No. 30 at 9. The EPA
asserts that it does not have a mandatory duty to monitor or
de-designate the Town. Id. at 14. On March 17, 2016,
EPA filed an additional supplemental memorandum in support of
its motion. ECF No. 31. This memorandum was brief, simply
alerting the court that CWS mailed to EPA a letter dated
February 29, 2016, purporting to serve as notice of suit
under the CWA. Id. On April 15, 2016, CWS filed a
response in opposition to the motion to dismiss, arguing that
a reading of section 208 of the CWA and EPA's
implementing regulations prove that CWS has asserted a viable
claim under the APA. ECF No. 38. CWS also attempted to raise
a claim that EPA failed to perform annual reviews of funds
issued to South Carolina's State Revolving Fund
("SRF") program. ECF No. 38 at 13. On May 3, 2016,
EPA filed a reply brief rejecting CWS's arguments and
reasserting that the EPA does not have a mandatory duty to
de-designate a state's selected DMAs. ECF No. 43 at 3-6.
Further, the EPA argued that CWS cannot assert the SRF claim
for the first time in its reply. ECF No. 43 at 9-10.
Procedural History-CWS and the Town
January 4, 2016, the Town filed an answer to CWS's
complaint. ECF No. 13. As stated above, on February 15, 2016,
CWS filed an amended complaint adding the APA claims as an
additional basis for the court's jurisdiction against
EPA. ECF No. 25. CWS's amended complaint did not allege
new claims against the Town. See id. On February 29,
2016, the Town filed an answer to CWS's amended complaint
and filed a counterclaim against CWS seeking actual and
punitive damages, costs and expenses, and further relief as a
result of CWS's alleged misuse of the declaratory
judgment remedy. ECF No. 29. The Town alleges that CWS and
the Town were actively negotiating, but now CWS brings this
action "for an ulterior purpose and willfully misuses
the declaratory judgment remedy in an attempt to gain
advantage and to accomplish purposes not warranted by the
process." ECF No. 29 at 8.
March 21, 2016, CWS filed a motion to dismiss the
counterclaim, arguing that the Town's counterclaim is
untimely because it is a compulsory counterclaim that the
Town failed to ask the court for leave to bring, and that the
counterclaim fails to allege sufficient facts. ECF No. 32. On
April 21, 2016, the Town filed a response to CWS's motion
to dismiss, detailing facts about the negotiations between
the parties to support the counterclaim's timeliness and
its allegations. ECF No. 39. On May 13, 2016, CWS filed a
reply to the Town's response, arguing again for dismissal
of the counterclaim because of the Town's failure to
assert the counterclaim in its first answer and failure to
state a cognizable claim. ECF No. 44.
same time, the Town moved the court to address CWS's
allegations in the amended complaint. On April 21, 2016, the
Town filed a motion for summary judgment, arguing that
CWS's declaratory claims are actually requests for
injunctive relief and that the only private cause of action
under the CWA is a citizen suit enforcement proceeding.
Therefore, the Town argues that the court cannot grant relief
to CWS because this action is not a citizen suit. ECF No. 40;
ECF No. 40-1 at 4-8. On May 27, 2016, CWS filed a response,
arguing that the Town misconstrues the structure of the
action, and nevertheless, injunctive relief is proper since
the court has general equitable powers and jurisdiction. ECF
No. 46. On June 6, 2016, the Town filed a reply brief
rejecting CWS's counterarguments and reasserting the
Town's request for summary judgment. ECF No. 47. In these
motions, the parties also debated the court's subject
matter jurisdiction over a declaratory judgment request on
the restrictive covenants in the Town's bonds and the
27, 2016, the parties appeared before the court for a hearing
on EPA's motion to dismiss and CWS's motion to
dismiss. ECF No. 48. After hearing the
arguments of the parties, the court took the motions under
advisement and announced that it would issue a written order.
Id. This is the court's written order addressing
EPA's motion to dismiss and ...