Thousands of ranchers, farmers, trucking companies and other small businesses would be hit hard if the Clean Water Act is expanded to include groundwater discharges, as the Ninth Circuit recently held that it should in the case of County of Maui, Hawaii v. Hawaii Wildlife Fund, et al.

For example, many family farming operations in California use irrigation systems for crop production, and they routinely deposit clean water onto land which seeps into groundwater to recharge aquifers. Some of that water eventually reaches surface waters through natural processes.

Similarly, routine truck washing by small trucking fleets may discharge into groundwater. And 20% of homeowners throughout the United States discharge directly into domestic septic systems that seep into groundwater—by design.

For decades, the Clean Water Act has been interpreted to cover only direct point source discharges into certain surface waters that impact navigation. This interpretation is constitutionally required because the Clean Water Act is based upon the power of Congress to regulate interstate commerce and, accordingly, the Act regulates only discharges with at least some connection to waters that are navigable. That is why the terms “navigable waters” and “waters of the United States” are intertwined in the language of the Act.

But in the Maui case, the Ninth Circuit rejected that traditional interpretation by holding that a municipal wastewater reclamation facility operated by the County of Maui in Hawaii needed a federal permit under the Act to discharge treated, reclaimed domestic wastewater into wells, where through seepage the water ultimately reached the Pacific Ocean many miles from the point of discharge.

Thus, clean water reached the Pacific Ocean through dispersed groundwater flow—and not directly through a discrete point source. Of course, groundwater itself is neither navigable nor can it be readily made to be navigable. Ignoring that fact, the Ninth Circuit held that injection into the wells constituted the point source discharge and that the groundwater simply functioned as the transport mechanism into the ocean.

In extending the reach of the Clean Water Act to groundwater discharges, the Ninth Circuit ignored the navigability requirement entirely, thereby going beyond the Commerce Clause limits of the Act. In so doing, the court ignored the function of the Necessary and Proper Clause, which authorizes Congress to enact only laws that are required to implement its constitutional powers.

Furthermore, the regulation of groundwater is traditionally an area subject to state regulation, as evidenced by the panoply of state health and safety regulatory programs that encourage “cooperative federalism” in the context of groundwater protection. Even the federal Safe Drinking Water Act recognizes state preeminence in the area of groundwater regulation. By extending the Clean Water Act’s point source regulatory program to cover groundwater discharges, the Ninth Circuit has disrupted the delicate federal-state regulatory balance, and such a disruption is itself constitutionally suspect.

The implications of the decision are far-reaching, especially for small businesses. The high costs and regulatory burdens of the Clean Water Act’s permitting program are legendary. Family-owned farms, ranches, and other small businesses have limited means, while larger businesses likely have the capital or credit required to comply. Not only did the Ninth Circuit ignore the constitutional dimensions of its decision but it also ignored the palpable fact that its decision places small businesses at a substantial competitive disadvantage. Studies show that small business account for 62% of new job creation and 44% of GDP. Accordingly, there will be a negative spillover effect on the overall economy should the Ninth Circuit’s decision stand.

The Supreme Court will hear oral argument in the case during the 2019-2020 term. Small businesses need to follow the case closely, especially in light of the fact that the County of Maui is considering whether to settle the case before oral argument.

If the county chooses to settle, other cases in the pipeline will address the same issue. In fact, there is currently a split between the Fourth Circuit and the Sixth Circuit regarding whether groundwater is covered by the Clean Water Act’s point source permitting program, leaving small businesses with a wide open question regarding the regulatory reach of the Clean Water Act. That question needs a quick and definitive resolution by the Supreme Court.