State ex rel. Yost v. Rover Pipeline, L. L.C.

• Decision Date: 17 March 2022
• Docket Number: 2020-0091
• Parties: The STATE EX REL. YOST, Atty. Gen., Appellant, v. ROVER PIPELINE, L.L.C., et al., Appellees.
• Court: Ohio Supreme Court

167 Ohio St.3d 223

191 N.E.3d 421

The STATE EX REL. YOST, Atty. Gen., Appellant,

v.ROVER PIPELINE, L.L.C., et al., Appellees.

No. 2020-0091

Supreme Court of Ohio.

Submitted January 26, 2021

Decided March 17, 2022.

Dave Yost, Attorney General, Benjamin M. Flowers, Solicitor General, Samuel C. Peterson, Deputy Solicitor General, and Aaron S. Farmer, Janean R. Weber, and Amanda M. Ferguson, Assistant Attorneys General, for appellant.

McMahon DeGulis, L.L.P., Erin M. McDevitt-Frantz, and Michael S. McMahon, Cleveland; and Gibson, Dunn & Crutcher, L.L.P., William S. Scherman, David DeBold, Ruth Porter, and Matthew Rozen, for appellee Rover Pipeline, L.L.C.

Tucker Ellis, L.L.P., Joseph P. Koncelik, Anthony R. Petruzzi, and Melissa Z. Kelly, Cleveland, for appellee Pretec Directional Drilling, L.L.C.

Thompson Hine, L.L.P., Kip T. Bollin, and Heidi B. Friedman, Cleveland, for appellee Laney Directional Drilling Company.

Ulmer & Berne, L.L.P., Frederic X. Shadley, and David A. Meyer, Cincinnati, for appellee Mears Group, Inc.

Dworken & Bernstein Company, L.P.A., Grant Keating, Richard N. Selby II, and Erik L. Walter, Painesville, for appellee B&T Directional Drilling, Inc.

Murphy Landen Jones, P.L.L.C., Kevin L. Murphy, J. Jeffrey Landen, and Michael S. Jones ; and Atlas Trenchless, L.L.C., and Philips J. Vallakalil, for appellee Atlas Trenchless, L.L.C.

Trent Dougherty and Chris Tavenor, urging reversal for amici curiae, Ohio Environmental Council and Sierra Club.

Donnelly, J. {¶ 1} Appellee Rover Pipeline, L.L.C., sought a license to construct an interstate pipeline that crossed several counties in Ohio. As required by Section 401 of the Clean Water Act ("section 401"), 33 U.S.C. 1341(a)(1), Rover applied for certification from the state of Ohio that any discharge into the state's navigable waters would comply with applicable provisions of federal law. When the pipeline discharged pollutants into surrounding waters, the state of Ohio sued Rover and other companies involved in building the pipeline. Rover argued that the state's complaint should be dismissed because the state had waived its ability to participate in the certification process when it did not respond to Rover's application within one year. We agree. The waiver applies, however, only to issues that are related to the section 401 certification, the contours of which have not been established by the trial court. Accordingly, we reverse, and we remand with instructions to determine whether the violations alleged by the state can be prosecuted or whether the state has waived the right to take action.

FACTS AND PROCEDURAL HISTORY

{¶ 2} Appellant, the Ohio Attorney General ("the state"), sought injunctive relief and other remedies after pollutants were discharged from the pipeline into Ohio's navigable waters. On July 19, 2018, in a third amended complaint, the state alleged, among other things, that Rover and the other appellees, Pretec Directional Drilling, L.L.C.; Laney Directional Drilling Company; Atlas Trenchless, L.L.C.; Mears Group, Inc.; and B&T Directional Drilling, Inc. (collectively, "the defendants") had "illegally discharged millions of gallons of drilling fluids to Ohio's waters, causing pollution and degrading water quality on numerous occasions and in various counties across the state." The state alleged seven specific counts:

(1) "Defendants discharged pollutants to waters of the state without point source [National Pollutant Discharge Elimination System] permits."

(2) "Rover failed to obtain a general storm water permit for its storm water discharges."

(3) "Defendants violated Ohio's general water quality standards."

(4) "Defendants violated Ohio's wetland water quality standards."

(5) "Rover violated the [Ohio Environmental Protection Agency] Director's orders."

(6) "Rover violated the hydrostatic permit."

(7) "Rover engaged in activities without effective certification."

The state also asked the trial court to retain jurisdiction "to carry out its judgment" and such other relief as may be just.

{¶ 3} Rover and Mears filed a joint motion to dismiss the complaint; the other defendants filed separate motions to dismiss. In an order issued on March 12, 2019, the trial court noted that the motions were largely duplicative and it therefore focused on the motion submitted by Rover and Mears, because "the claims arising against the other defendants are a result of actions taken at the behest of Rover." The trial court granted the various Civ.R.12(B) motions to dismiss, stating:

On November 16, 2015, the State of Ohio received a 401 Certification request from Rover. As such, the State of Ohio had until November 16, 2016, to "act" on such request pursuant to Section 401 of the Clean Water Act. * * *

* * * The Court finds that, in order to assert its rights under the Clean Water Act, the State of Ohio was required to "act," i.e., grant or deny, upon Rover's November 16, 2015, 401 Certification request on or before November 16, 2016. Its failure to do so, resulted in a waiver of rights.

The court concluded that it did not have jurisdiction over the matter, because the state had "failed to act upon rights specifically given to it pursuant to the Clean Water Act within the Act's specified period of time."

{¶ 4} The state appealed. The court of appeals affirmed, stating that it "is undisputed in the case [that the state] failed to act on Rover's original certification request within one year of November 16, 2015." 2019-Ohio-5179, 150 N.E.3d 491, ¶ 20. With respect to the extent of the waiver, the court of appeals essentially deferred to the findings of the trial court. Having overruled the first assignment of error, which was related to the issue of waiver by the state, the court of appeals deemed a second assignment of error addressing other asserted defenses moot.

{¶ 5} The state timely appealed, and we accepted the appeal. 158 Ohio St.3d 1482, 2020-Ohio-1487, 143 N.E.3d 520.

ANALYSIS

{¶ 6} This case is before us based on the trial court's grant of the defendants’ motions to dismiss under Civ.R. 12(B)(1) and (6). We review dismissals pursuant to Civ.R. 12(B)(6) de novo, Alford v. Collins-McGregor Operating Co. , 152 Ohio St.3d 303, 2018-Ohio-8, 95 N.E.3d 382, ¶ 10, presume the truth of all material factual allegations in the complaint, id. , and make all reasonable inferences in the state's favor, State ex rel. Bohlen v. Halliday , 164 Ohio St.3d 121, 2021-Ohio-194, 172 N.E.3d 114, ¶ 12, citing State ex rel. Zander v. Judge of Summit Cty. Common Pleas Court , 156 Ohio St.3d 466, 2019-Ohio-1704, 129 N.E.3d 401, ¶ 4. We also review dismissals under Civ.R. 12(B)(1) de novo. State ex rel. Ohio Civ. Serv. Emps. Assn. v. State , 146 Ohio St.3d 315, 2016-Ohio-478, 56 N.E.3d 913, ¶ 12.

{¶ 7} The state's second proposition of law states: "The one-year time limit in Section 401 of the Clean Water Act begins to run only once the applicant submits a completed application." We disagree.

{¶ 8} Section 401 states:

If the State, interstate agency, or Administrator, as the case may be, fails or refuses to act on a request for certification, within a reasonable period of time (which shall not exceed one year) after receipt of such request, the certification requirements of this subsection shall be waived with respect to such Federal application.

33 U.S.C. 1341(a) ; see Sierra Club v. State Water Control Bd. , 898 F.3d 383, 388 (4th Cir.2018) (after receiving a section 401 application, a state has four options: grant a certificate without conditions, grant it with conditions, deny it, or waive its right to participate in the process).

{¶ 9} The state encourages us to rely on AES Sparrows Point LNG, L.L.C. v. Wilson , 589 F.3d 721, 729 (4th Cir.2009), which deferred to an Army Corps of Engineers’ determination that the clock did not begin to run until a completed section 401 application was submitted. The state argues that an application is not valid unless it is complete, which had been the practice of the Federal Energy Regulatory Commission ("FERC") until August 1985, see California ex rel. State Water Resources Control Bd. v. Fed. Energy Regulatory Comm. , 966 F.2d 1541, 1552 (9th Cir.1992).

{¶ 10} Rover, Pretec Directional, and Mears Group argue that allowing the state to determine when the one-year clock starts based on its own determination whether an application is complete gives the state too much discretion. In our view, it is discretion that is not needed, because the state can reject an application as incomplete or for another legitimate reason.

{¶ 11} Other courts have concluded that the clock starts running upon the submission of an application. In New York State Dept. of Environmental Conservation v. Fed. Energy Regulatory Comm. , 884 F.3d 450, 456 (2d Cir.2018), the court specifically addressed the issue before us and concluded that because the statute does not refer to "complete" applications, the one-year period begins upon the submission of an application. See California State Water Resources Control Bd. at 1552 (noting that the FERC had issued a new rule on February 11, 1987, regarding section 401 certification, that stated that the "one-year period for waiver would commence on the date the certifying agency received the certification request").

{¶ 12} We conclude that the one-year period during which the state must act on a request for certification under section 401 begins when the application is submitted, not when it is deemed complete. Though we do not rely on it, we note that the federal Environmental Protection Agency recently stated that "the section 401 certification process begins on the date when the certification request is received by a certifying authority."

Clean Water Act Section 401 Certification Rule, 85 Fed.Reg. 42210, 42243 (July 13, 2020) ; see also 40 C.F.R. 121.6(d) ("The Federal agency may extend the reasonable period of time at the request of a certifying authority or a project proponent, but in no case shall the reasonable period of time exceed one...