United States District Court, D. South Carolina, Columbia Division
ORDER AND OPINION
Honorable Margaret B. Seymour Senior United States District
January 14, 2015, Plaintiff Congaree Riverkeeper, Inc.
(“Plaintiff”) sued Defendant Carolina Water
Service, Inc. (“Defendant”) for violations of the
Clean Water Act (“CWA”), 33 U.S.C. §§
1251 et seq. (2012). In Claim I, Plaintiff claims
that Defendant violated its National Pollutant Discharge
Elimination System (“NDPES”) permit by failing to
connect its wastewater treatment plant (“WWTP”)
to the regional system. In Claim III, Plaintiff asserts
Defendant violated the effluent limitations allowed under
Defendant's NDPES permit. Plaintiff moves for summary
judgment on Claims I and III. ECF No. 57. Defendant moves for
summary judgment on Claim I. ECF No. 58.
August 1, 2016, the South Carolina Department of Health and
Environmental Control (“DHEC”) denied
Defendant's permit renewal request. ECF No. 64-1. On
September 7, 2016, the court issued a text order requiring
each party submit a supplemental brief on the impact of
DHEC's decision to deny the permit renewal on the present
case. Both parties asserted that DHEC's decision not to
renew does not affect the current case. ECF No 64 at 5
(Plaintiff's supplemental brief); ECF No. 65 at 1
(Defendant's supplemental brief).
reasons set for below, the court grants Plaintiff's
motion for summary judgment and denies Defendant's motion
for summary judgment. The court finds there is no genuine
issue of material fact that Defendant violated the terms of
its NDPES permit by failing to connect to the regional
system. The court finds there is no genuine issue of material
fact that Defendant exceeded its effluent limitations and
Defendant cannot demonstrate the affirmative defense of
FACTUAL AND PROCEDURAL BACKGROUND
is a § 501(c)(3) not-for-profit organization that works
to protect and improve the environmental status and
recreational uses of the Congaree, Lower Saluda, and Lower
Broad Rivers in South Carolina. ECF No. 1 at ¶ 12.
Plaintiff's board, staff, and members live near and
regularly visit the Lower Saluda River and intend to visit
that river in the future. ECF No. 1 at ¶ 14. Defendant
owns and operates wastewater treatment plants
(“WWTPs”) and other associated facilities as a
public utility pursuant to South Carolina Code Annotated
§§ 58-3-5(6), 58-3-10(4). ECF No. 58-1 at 5. The
Public Service Commission of South Carolina
(“PSC”) has exclusive jurisdiction to regulate
public utilities in South Carolina, including the oversight
and approval of any agreement or contract affecting a public
utility's ability to provide sewer service to citizens.
ECF No. 58-1 at 6 n.6. PSC issued Defendant's WWTPs
operating certificates of public convenience and necessity.
ECF No. 58-1 at 5.
Midlands Counsel of Governments (“CMCOG”) is
tasked with conducting water quality planning and management
for the Midlands region of South Carolina. See ECF
No. 58-1 at 3-4. The Town of Lexington (“Town”)
falls within the Midlands region and was chosen as the
Designated Management Agency (“DMA”) and regional
provider of wastewater collection by the CMCOG, in
consultation with the governor, pursuant to 33 U.S.C. §
1288(a). ECF No. 58-1 at 4 n.3. DHEC has the overarching
responsibility of regulating activities affecting water
quality and establishing classifications and standards.
DHEC's issues NDPES permits. Any DHEC decision may be
appealed to an administrative law court (“ALC”).
The ALC decision may then be appealed to the South Carolina
Board of Health and Environmental Control
(“Board”). Finally, any Board decision may be
appealed to a South Carolina circuit court.
1979, pursuant to CWA § 208, 33 U.S.C. § 1288,
CMCOG drafted The 208 Water Quality Management Plan for
the Central Midlands Region (the “208 Plan”)
a waste treatment and water quality plan for the region. The
208 Plan was most recently updated in 2004. In the 208 Plan,
CMCOG states a general policy to consolidate smaller
facilities into regional systems. ECF No. 58-1 at
1993 revision of the 208 plan designated a facility owned by
the City of Cayce, South Carolina, as the regional treatment
facility (“RTF”) that would service the Midlands
region. ECF No. 58-1 at 5.
owns and operates a WWTP in Lexington County, South Carolina,
known as the I-20 Plant. Id. DHEC issued NPDES
Permit No. SC0035564 (“the Permit”) to Defendant
on November 17, 1994, (effective January 1, 1995). ECF No. 57
at 4. The Permit was modified in April 1996 and was due to
expire on September 30, 1999. ECF 57-1. The Permit authorizes
Defendant to discharge wastewater from the I-20 Plant into
the Lower Saluda River subject to effluent limitations and
monitoring requirements. Importantly, the Permit provides
that “[i]n accordance with the [208 Plan], the [I-20]
facility is considered a temporary treatment facility that
will be closed out when the regional sewer system is
constructed and available.” ECF No. 57-1.
Defendant's permit was to expire when the regional system
received its permit to operate. Id.
April 7, 1999, Town completed construction on the regional
sewer line and received a Permit to Operate from DHEC. ECF
No. 58-1 at 6. On April 21, 1999, DHEC informed Defendant and
Town that the regional system received its permit to operate
and that Defendant's construction permit to connect to
the regional system was approved. ECF Nos. 65-4, 65-5. Town
and Defendant were unable to agree on the terms of a
connection. ECF No. 65 at 2. Defendant never constructed the
pipeline to connect to the regional system. Id. On
July 16, 1999, and August 24, 1999, Defendant sought a major
modification to the Permit that would allow the I-20 Plant to
continue operating indefinitely as Defendant negotiated with
Town and sought PSC approval to connect to the regional
system. ECF 61-2 at 24-25. DHEC denied Defendant's major
modification requests on the basis that Defendant did not
provide good cause for its requests. ECF 61-4 at 2. In
February 2000, DHEC found that Defendant was in violation of
the Permit due to Defendant's failure to connect to the
regional system and for exceeding permitted discharge levels.
ECF No. 61-5. In February or March 2000, Defendant appealed
denial of the modification, denial of permit reissuance, and
issuance of violations to the ALC. See Carolina Water
Service v. S.C. Dept. of Health and Environ. Control,
No. 99-ALJ-07-0450, 2002 WL 385126 (S.C. Admin. L. Judge Div.
Feb. 25, 2002) [hereinafter 2002 ALC Decision].
2000, DHEC and Town entered into an agreement that (1) noted
Town's regional system had insufficient capacity to
handle the wastewater from Defendant's system, (2) noted
PSC must approve any agreement between Town and Defendant,
and (3) required Town to offer Defendant a contract by August
5, 2000. ECF No. 65 at 3. Town and Defendant came to an
agreement and submitted said agreement to PSC (Docket No.
2000-425-S); however, Defendant withdrew the agreement from
consideration in January 2001 pending consideration of
Defendant and Town's joint amendment to the 208 Plan.
Id. The amendment from Defendant and Town proposed
that the I-20 Plant be designated as a permanent treatment
facility and not be required to connect to the regional
March 22, 2001, CMCOG approved the joint amendment to the 208
Plan. ECF No. 58-1 at 7. However, DHEC refused to certify the
amendment. ECF No. 58-1 at 7. In August 2001 Defendant, Town,
and CMCOG filed a petition in the ALC protesting DHEC's
refusal to certify the proposed amendment. The Lexington
County Joint Municipal Water and Sewer Commission intervened.
See CMCOG v. DHEC, Nos. 01-ALJ-07-0363-CC,
01-ALJ-07-0364-CC, 01-ALJ-07-0365-CC, 01-ALJ-07-0433-CC, 2002
WL 31716469 (S.C. Admin. L. Judge. Div. Oct. 22, 2002).
February 25, 2002, the ALC issued a decision on
Defendant's appeal of DHEC's denial of the
modification, denial of permit reissuance, and issuance of
violations. The ALC deferred to CMCOG's finding that
Defendant was in conformance with the NDPES permit until
February 24, 2000, because the regional system was not
available for connection. Carolina Water Service,
2002 ALC Decision at *4, *6. Further, the ALC modified the
permit compliance schedule requiring Defendant connect to the
regional system. Id. at 9. Essentially, the ALC
ordered that Defendant was under an “on-going
obligation to negotiate an agreement and to continue to seek
an agreement between [Defendant] and [Town] that will be
approved by the PSC.” Id. at 10. The order
then states specific timeframes if PSC approves of an
agreement. Alternatively, the ALC held that if PSC denies the
connection agreement, then the permit will expire after one
hundred-eighty days of the final PSC Order. Id.
and DHEC both appealed to the DHEC Board. Carolina Water
Service v. S.C. Dep't of Health and Environ.
Control, No. 99-ALJ-07-0450, ECF No. 16-3 (DHEC Board
Order March 15, 2004) [hereinafter 2004 Board Order]. The
DHEC Board reversed the ALC's holding that
Defendant's permit would expire one hundred-eighty days
after a PSC denial but otherwise affirmed the ALC's
amended schedule to connect to the regional system-including
Defendant's on-going obligation to negotiate with Town
for an acceptable contract. Id. at 5.
2002, Defendant submitted the 2000 interconnection agreement
to PSC for approval, with modifications to the customer rate.
PSC refused to approve the interconnection, finding the
proposed agreement against the public interest. In re
Application of Carolina Water Service, No. 2002-147-S,
2003 WL 26623818 at *5 (S.C.P.S.C. 2003). PSC found that
Defendant agreed to pay too high a rate for the service
received and Defendant's customers, in effect, would
subsidize the regional system. Id. at 6. PSC denied
Defendant and Town's alternative plan, which would sell
one of Defendant's other facilities and designate the
I-20 Plant as a permanent treatment facility. Id.
August 2009, the City of Cayce, Town, and the Lexington
County Joint Municipal Water and Sewer Commission entered
into a contract to expand the capacity of the Cayce regional
treatment plant. See ECF No. 58-3. The construction
of the expansion was financed through issuance of tax-exempt
bonds with restrictive covenants designed to preserve the
bonds' tax-exempt status. ECF No. 58-3 at 38-39. One
condition is a restriction on the amount of wastewater from
“Private Business Use” that can be treated.
Id. “Private Business Use” includes a
private utility like the I-20 Plant. Id.; see
also ECF No. 58-1 at 9. Town covenanted that it would
not enter into any contract or agreement for sale of its
wastewater services or allocated capacity that constitutes a
“Private Business Use.” ECF No. 58-3 at 39. If
Town contracted with another party for activity that
constituting “Private Business Use, ” the
contract “may cause the interest on [b]onds to be
included in the gross income of the holders, ” thereby,
extinguishing the bonds' tax-exempt status. See
ECF No. 58-3 at 38.
did not engage in negotiations with Town after the denial by
PSC in 2003 until 2014, after Plaintiff served its notice of
intent to sue under the CWA. See ECF No. 58-1 at 8.
In July 2012, Defendant again inquired into making the 1-20
Plant into a permanent facility and stated to DHEC that it
had not had “any recent discussions with [Town] about
hooking up to [the regional] system.” ECF No. 57-4.
November 6, 2013, Plaintiff served on Defendant and DHEC
notice of intent to sue under the CWA. ECF No. 58-1 at 10.
Plaintiff asserted that Defendant was in violation of NPDES
Permit SC0035564 since it has failed to eliminate its
discharge into the Saluda River. ECF No. 58-1 at 10.
March 21, 2014, Defendant initiated negotiations with Town
regarding a possible connection to the regional system. No.
58-5. On May 8, 2014, Town responded that it was not
interested in an interconnection at the time. ECF No. 7-10.
31, 2014, Defendant and Town entered into a confidentiality
agreement to negotiate a sale of the I-20 Plant. ECF No.
58-6. Town was interested in acquisition of the I-20 Plant
only if it also acquired another facility owned by Defendant,
the Watergate system. ECF No. 58-7. Before engaging in
further negotiations Defendant requested a non-binding letter
“indicating that a $13.5 Million price is within a
reasonable range of value that the Town would be willing to
consider paying.” Id. Town declined to enter
into a non-binding letter of agreement, stating it was unable
to determine if that price was within a reasonable range
without other information. ECF No. 58-7. Defendant provided
Town with maps of the system, as requested. ECF No. 58-7. In
December 2014, Defendant provided Town with additional
information on the number of customers, yearly revenue,
yearly costs, and other data. ECF No. 58-8. Town did not
respond to Defendant about the proposed price and did not
make an offer for the systems. ECF No. 58-1 at 11.
2015, Defendant submitted a draft permit renewal to DHEC,
which sought to add that “[t]o connect to the Town DHEC
recognizes that [PSC] must approve an agreement related to
connection to the regional sewer line.” ECF No. 65-8 at
34. DHEC issued a fact sheet noting that Defendant would need
PSC approval and that DHEC does not have the authority to
force Defendant and Town make a connection agreement.
Id. at 41. On August 25, 2015, DHEC held a public
hearing to elicit public feedback on Defendant's permit
renewal request. ECF No. 65 at 7. Approximately 285
individuals attended the hearing, including numerous public
officials. ECF No. 64 at 3. Almost all attendees advocated
for denial of the renewal permit. Id.; ECF No. 58-18
September 3, 2015, Defendant unilaterally filed an
application with PSC seeking approval of an interconnection
agreement at the wholesale treatment rate Town charged
Defendant for another system. ECF No. 34-1 (PSC Docket No.
2015-327-S). Defendant did not seek Town's approval
before submitting the application. ECF No. 58-10 at 2.
September 4, 2015, DHEC issued a notice of intent to deny the
renewal permit. ECF No. 33-1 at 1. DHEC determined Defendant
was ineligible for a permit renewal because Defendant's
permit required Defendant to connect to the regional system
once the system was operational and Defendant failed to do
so. ECF No. 33-1 at 1.
September 9, 2015, Defendant sent Town a letter requesting
interconnection on the terms set forth in the September 3,
2015, application. ECF No. 58-9. Town declined any interest
in an interconnection agreement as the terms did not
accurately reflect current costs. ECF No. 58-10 at 2-3. Town
indicated a continued interest in acquisition of the I-20
Plant, but only if Defendant agreed to pay a portion of
Town's due diligence. ECF No. 58-1 at 12-13. Defendant
responded that it was not interested in such an agreement.
ECF No. 58-1 at 12.
November 10, 2015, South Carolina Office of Regulatory Staff
organized a meeting to facilitate negotiations between
Defendant and Town. ECF No. 65 at 8. At this meeting,
Town's limiting contractual and bond covenants were
discussed. Id. In January 2016, Defendant's PSC
application was dismissed without prejudice. See ECF
No. 65-8 at 74. Between April 2016 and July 2016, DHEC
conducted numerous mediation sessions between Defendant and
Town. ECF No. 65 at 9.
August 1, 2016, DHEC formally denied Defendant's permit
renewal request. ECF No. 64-1. As part of DHEC's denial,
DHEC required Defendant and Town submit a coordinated plan
for Defendant to connect to the regional treatment facility
within sixty days. ECF No. 64-2 at 5. If DHEC did not approve
that plan, an amended plan must be resubmitted within fifteen
days. Id. Finally, Defendant's plant must be
connected to the regional system and cease discharge within
twelve months. Id. Defendant appealed denial of
permit reissuance to ALC on September 21, 2016. ECF No. 65 at
date, there has been no interconnection agreement or
acquisition agreement for the I-20 Plant and Defendant
continues to discharge water into the Saluda River. Defendant
is permitted limited discharges into the Saluda River.
Defendant has exceeded those discharge limits twenty-three
times between 2009 and 2013. ECF No. 1-3.
court shall grant summary judgment if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56. The judge does not weigh evidence but determines if there
is a genuine issue for trial. Anderson v. Liberty
Lobby, 477 U.S. 242, 249 (1986). The party seeking
summary judgment bears the initial burden of coming forward
and demonstrating an absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). Once the moving party has met its burden, the
nonmoving party must affirmatively demonstrate that there is
a genuine issue of material fact for trial. Matsushita
Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986). The court should grant summary judgment if a
party fails to “establish the existence of an element
essential to that party's case, and on which that party
will bear the burden of proof at trial.” Celotex
Corp., 477 U.S. at 322.
moves for summary judgment on Claims I and III. Plaintiff
argues that there is no genuine issue of material that (1)
Plaintiff has standing to sue, (2) Defendant was required to
connect to the regional treatment facility under the 1994
Permit, and (3) Defendant violated the effluent limitations
requirement on twenty-three occasions. Defendant moves for
summary judgment on Claim I. Defendant claims there is no
genuine issue of material fact that (1) Plaintiff lacks
standing, (2) Plaintiff is barred by the statute of
limitations, (3) the 2002 modifications to the permit apply
and Defendant is in compliance with the modified terms, or if
the 1994 Permit applies, Defendant is in compliance with the
1994 Permit as well. Defendant argues there is a genuine
issue of material fact whether it has an “upset
defense” to its effluent limitations violations.
Claim I: Violation of Connection
Plaintiff Not Barred by Statute of Limitations
asserts that the alleged violation of failure to connect
occurred more than five years prior to the filing of the
complaint; therefore, Plaintiff's action is barred by the
statute of limitations. At the motion to dismiss stage, the
court held that the violation is ongoing, thus not barred by
the statute of limitations.
Defendant also argued that Plaintiff's first cause of
action was barred by the five-year statute of limitations
contained in 28 U.S.C. § 2462. Plaintiff countered that
the alleged violation was a continuing violation.
Citizen-plaintiffs show an ongoing violation “either
(1) by proving violations that continue on or after the date
the complaint is filed, or (2) by adducing evidence from
which a reasonable trier of fact could find a continuing
likelihood of a recurrence in intermittent or sporadic
violations. Intermittent or sporadic violations do not cease
to be ongoing until the date when there is no real likelihood
of repetition.” Chesapeake Bay Found., Inc. v.
Gwaltney of Smithfield, Ltd., 844 F.2d 170, 171-72 (4th
Cir. 1988). Assuming for the purposes of the motion to
dismiss that Defendant's failure to connect its ...