Because the state missed a deadline to issue pollution permits, it lost some of its rights to punish a pipeline operator for spilling millions of gallons of diesel fuel into Ohio waterways, the Supreme Court of Ohio ruled today.

In a 4-3 decision, the Supreme Court ruled a Stark County trial court incorrectly dismissed an attempt by the Ohio Attorney General’s Office to seek damages from Rover Pipeline and several subcontractors after two discharge violations. Rover argued that since the Ohio Environmental Protection Agency (EPA) failed to act on certifying Rover’s federal permit within one year of submission, the state waived all rights to enforce water pollution violations.

Writing for the Court majority, Justice Michael P. Donnelly said the Court agreed with Rover that the state waived its right “with respect to the federal application.” However, the federal law is unclear on what oversight the state gave up and what rights it retained to sanction Rover, he concluded.

The Court remanded the case to the Stark County Common Pleas Court to determine if any of the seven specific allegations made by the attorney general are barred by the federal permit.

Chief Justice Maureen O’Connor and Justices Melody Stewart and Jennifer Brunner joined Justice Donnelly’s opinion.

In a dissenting opinion, Justice Patrick F. Fischer wrote the state waived all its rights to enforce water discharge violations governed by the permitting process. However, he wrote the attorney general can still pursue one allegation dealing strictly with a state permit and can pursue a lawsuit against Rover in federal court.

Justices Sharon L. Kennedy and R. Patrick DeWine joined Justice Fischer’s opinion.

Permit Sought for Pipeline Construction
Rover’s interstate pipeline operation is overseen by the Federal Energy Regulatory Commission (FERC). As part of its federal license to construct its natural gas pipeline in Ohio, Rover sought certification from the state that any discharge into Ohio’s navigable waters would comply with all provisions of the federal Clean Water Act. This process is known as Section 401 certification. Rover submitted its certification application to Ohio EPA in November 2015. A state has one year to act on the certification, and if it does not, the certification requirements “shall be waived with respect to such Federal application,” the Clean Water Act states.

The Ohio EPA did not grant Rover’s certification until February 2017. In April 2017, the company and several contractors experienced two major fluid spills, one that included natural materials that were noted in its permits and the other containing diesel-laced water that the companies did not disclose they were using in the pipeline’s construction.

The attorney general sued Rover and the contractors, raising seven claims. The state’s claims included failure to obtain a state permit for storm water discharges; violations of Ohio’s general and wetlands water quality standards; and violating the terms of its separately state-issued hydrostatic permit. The hydrostatic permit limits discharges that might occur when Rover and its contractors test the pipeline’s structural integrity.

Operator Seeks to Throw Out Charges
Rover asked the trial court to dismiss the state’s case, arguing that because the state did not act on its certification request within one year, it waived the right to enforce the regulations for water pollution discharges. Rover maintained the state waiver meant only its federal regulator, FERC, can enforce the permit. The company argued it was complying with FERC orders regarding the spills.

The trial court agreed with Rover and dismissed the case. The attorney general appealed to the Fifth District Court of Appeals, which affirmed the trial court’s decision.

The state appealed to the Supreme Court, which agreed to hear the case.

Supreme Court Analyzes State’s Delayed Response
The attorney general argued the state did not miss the deadline to act on the Section 401 certification and, if it did, the lack of participation in the certification did not impact its right to enforce Ohio’s water quality standards.

Justice Donnelly noted the state argued the one-year time limit to act begins when a “completed application” is submitted, and the Ohio EPA informed Rover that its initial application was incomplete. The Ohio EPA maintained that once Rover submitted all the required materials, it acted within a year of the completed application.

The Court majority rejected the claim. Based on the language of the federal law, the Court ruled the clock starts when the application is submitted, and Ohio EPA failed to act within a year.

The Court also rejected the attorney general’s argument that the failure to act had no effect on the state’s ability to enforce water pollution laws.

“Frankly, it is not plausible that the state’s failure to act would not have any effect, and the state concedes that point,” the opinion stated.

Enforcement Authority Unclear
The Court majority found the failure to act waived the state’s right “with respect to the federal application,” but that the trial court failed to define what allegations made by the state are limited by the federal certification process and what rights the state retains under the Clean Water Act.

For instance, the Court noted that the flow of storm water is governed by state and federal laws outside of the 401 certification. The Court stated the trial court needs to consider the state’s argument regarding the failure to obtain a storm water permit.

“We consider it is possible, even likely, that given the opportunity to present evidence, the state will be able to establish that certain allegations fall outside the contours of the Section 401 certification,” the opinion concluded.

State Missed Right to Enforce Federal Permit, Dissent Maintains
Justice Fischer noted that the federal application applies to “any activity” regarding the construction of the pipeline in Ohio and gave the state the right to add any condition it thought necessary to comply with state water pollution laws. Since the state did not act within one year, it waived its rights to enforce conditions related to “any activity” that may result in discharges in connection with the pipeline, and deferred enforcement to the federal government, the dissent stated.

Justice Fischer noted that FERC required Rover acquire a state hydrostatic permit, and the attorney general’s claim that Rover violated the hydrostatic permit is not an issue covered by the Section 401 certification. The dissent also stated that the U.S. Supreme Court has ruled that states can file federal lawsuits to enforce the Clean Water Act.

“The state’s ability to file a suit under the Clean Water Act, coupled with its ability to enforce the hydrostatic permit, means that the state has some tools at its disposal to ensure Rover’s compliance with its relevant obligations, despite the state’s Section 401 waiver,” the dissent stated.

2020-0091. State ex rel. Yost v. Rover Pipeline, Slip Opinion No. 2022-Ohio-766.

View oral argument video of this case.

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