Our first case for the month of October comes from the Court of Appeals for Henry County, Ohio. Property owners claimed that the City of Napoleon negligently designed, constructed, and maintained a sewer system. The court focused on the City’s sovereign immunity defense in denying relief to the property owners. For our second decision we look all the way to the State of California and the United States Court of Appeals for the Ninth Circuit. In this case the court was asked to determine if the U.S. EPA is required to develop storm water guidelines and standards for construction sites pursuant to the National Pollutant Discharge Elimination System and the Clean Water Act.

Ohio Appellate Court Affirms Power of Statutory Immunity for Public Owners

Sovereign immunity protects a political subdivision from lawsuits where the political subdivision is performing a governmental or proprietary function. In Ward v. City of Napoleon, 2008-Ohio-4643, the Court of Appeals for Henry County concluded that statutory immunity defeated the Ward’s claims of negligent design, construction, and maintenance of a city sewer system.

Nearly 15 years ago, the City of Napoleon designed and built a new sewer, including a new catch basin in front of the property subsequently purchased by the Wards. In 1998, a period of intense rain caused raw sewage to backup on the Wards’ property. Believing the sewage backup resulted from problems with the City’s sewer system, the Wards filed a complaint alleging that the sewer system was City-owned, and that the City negligently constructed and maintained that sewer system.

At the trial court level, the City filed a motion for summary judgment based on the principle of sovereign immunity. According to Ohio Revised Code Chapter 2744, a political subdivision is immune from liability sustained while performing a governmental function or proprietary function, unless it meets one of the many exceptions. The trial court denied the motion. Pursuant to R.C. 2744.02, the City filed an interlocutory appeal of the trial court’s ruling.

The lone issue addressed by the appellate court was whether sovereign immunity protected the City from liability.

Citing to longstanding precedent from the Ohio Supreme Court, the court explained that the immunity question “involves a three-tiered analysis.” The first tier involves the “general rule that a political subdivision is immune from liability incurred in performing either a governmental or proprietary function.” There was no dispute that the City constitutes a political subdivision. Then, the court explained that the “design and construction of a sewer system is a governmental function [under R.C. 2744.01(C)(2)(1)].” Therefore, the City, as a political subdivision, is “immune from liability even where it may have been negligent.”

Moving on to tier two of the sovereign immunity analysis, the court explored whether one of the five exceptions in R.C. 2744.02(B) applied. The lone relevant exception in this case states that a political subdivision is liable for “negligent performance of acts of their employees with respect to proprietary functions.”

Among the proprietary functions identified by statute is the maintenance and/or operation of a sewer system. For the following reasons, the appellate court concluded that the City was not negligent:

  • There was no evidence that the sanitary sewer system was defective;
  • There was no evidence that the City had any control over the storm sewer system; and
  • Because the City did not require residents to connect to the sewer system near the Wards’ residence, it could not be negligent for failing to prevent nearby property owners from contributing to the sewage backup.

Because none of the statutory exceptions applied, the third and final tier of the sovereign immunity analysis was inapplicable (i.e. whether any of the defenses in R.C. 2744.03 apply to shield a political subdivision from liability). Therefore, sovereign immunity protected the City from liability.

U.S. EPA Must Promulgate Storm Water Guidelines and Standards for Construction Sites

With every passing year, storm water regulations seem to become more of a hot button issue in the construction industry. This year, the Ohio EPA finalized its more stringent Construction General Permit. And recently, the Court of Appeals for the Ninth Circuit in National Resources Defense Council v. United States Environmental Protection Agency, 2008 U.S. App. Lexis 19755, determined that the U.S. EPA must promulgate effluent limitation guidelines and new source performance standards for the construction industry.

The Clean Water Act prohibits the discharge of pollutants from point sources. However, the Clean Water Act also creates an exception in the form of a permit system that allows the facilities to discharge pollutants if certain requirements are met. This permit system is the National Pollutant Discharge Elimination System. NPDES permits contain point source effluent limitations, i.e. “restrictions on the quantity, rates, and concentration of chemical, physical, biological, and other constituents” which are discharged from a point source.

NPDES effluent limitations are based on “effluent limitation guidelines” and “new source performance standards” developed by the EPA. These guidelines and standards are technology based methods that address pollution from existing and new sources of pollution, respectively.

According to the Clean Water Act, the EPA is required to publish a plan every two years that identifies “categories of sources discharging toxic or non-conventional pollutants” for which effluent limitation guidelines and new source performance standards do not exist. Once the EPA identifies a category, it has three years to develop effluent limitation guidelines and new source performance standards for that category.

The National Resource Defense Council sued to force the EPA to adopt effluent limitation guidelines and new source performance standards for the construction industry. The NRDC claimed that the EPA published a plan in 2000 that labeled the construction industry as a category of sources that discharge toxic or non-conventional pollutants. Therefore, the Clean Water Act required the EPA to develop effluent limitation guidelines and new source performance standards for the construction industry within three years.

In 2004, the EPA attempted to withdraw its proposed effluent limitation guidelines and new source performance standards for the construction industry. The EPA indicated that the existing NPDES regulations were addressing 80-90 percent of construction site sediment runoff, the proposed rule would only remove an additional 1 percent of sediment runoff, and the cost for implementing the proposed rule (more than half a billion dollars per year) would be excessive when compared to the benefit.

In addition to the reasons for not implementing the standards, the EPA admitted that it made a mistake in declaring the construction industry a category of sources discharging toxic or non-conventional pollutants. It indicated that the pollutants from construction sites are conventional pollutants – not toxic or nonconventional pollutants.

The court’s analysis hinged on whether the EPA had discretion to promulgate the effluent limitation guidelines and new source performance standards for the construction industry. The court determined that once the EPA declared in its plan that the construction industry was a category discharging toxic or nonconventional pollutants, the EPA had no discretion with respect to adopting effluent limitation guidelines and new source performance standards as the Clean Water Act required the EPA do so.

The court further indicated that the timeline Congress stipulated for identifying categories and effluent limitation guidelines and new source performance standards resulted from frustration with the EPA’s slow pace of promulgating these regulations.

The Court inferred that the decision to add the construction industry to its list was not made lightly. The EPA went through a process of public review and comment and examined whether the category should be listed in its plan. The three-year period is not for determining whether or not to include the category in its plan, the three-year period exists to allow the EPA time to develop the substance of the effluent limitation guidelines and new source performance standards.