State ex rel. Yost v. Rover Pipeline, LLC

150 N.E.3d 491

2019 Ohio 5179

STATE of Ohio, EX REL., Dave YOST, Ohio Attorney General, Plaintiff-Appellant

v.ROVER PIPELINE, LLC; Pretec Directional Drilling, LLC ; Mears Group, Inc.; Laney Directional Drilling Co.; Atlas Trenchless, LLC ; and B & T Directional Drilling, Inc., Defendants-Appellees

No. 2019CA00056

Court of Appeals of Ohio, Fifth District, Stark County.

DATE OF JUDGMENT ENTRY: December 9, 2019

DAVE YOST, Ohio Attorney General, AARON S. FARMER, JANEAN R. WEBER, AMANDA M. FERGUSON, Environmental Enforcement Section, Assistant Attorney General, 30 East Broad Street, 25^th Floor, Columbus, Ohio 43215, For Plaintiff-Appellant

STEPHEN H. DANIELS, MICHAEL S. MCMAHON, McMahon DeGulis LLP, The Caxton Building, 812 Huron Road, E., Suite 650, Cleveland, Ohio 44115, WILLIAM S. SCHERMAN (pro hac vice admitted), DAVID DEBOLD (pro hac vice admitted), JASON FLEISCHER (pro hac vice admitted), RUTH PORTER (pro hac vice admitted), Gibson, Dunn & Crutcher LLP, 1050 Connecticut Avenue, N.W., Washington, DC 20036, For Defendant-Appellee Rover, Pipeline, LLC

GRANT J. KEATING, Dworken & Bernstein Co., LPA, 60 South Park Place, Painesville, Ohio 44077, For Defendant-Appellee B & T, Directional Drilling Inc.

RICHARD C. SAHLI, Richard Sahli Law Office, LLC, 981 Pinewood Lane, Columbus, Ohio 43230-3662, NATHAN D. MATTHEWS, 2101 Webster Street, Suite 1300, Oakland, CA 94612, For Amicus Curiae Sierra Club

FREDERIC ("FRITZ") X. SHADLEY, DAVID A. MEYER, 600 Vine Street, Suite 2800, Cincinnati, Ohio 45202, For Defendant-Appellee Mears Group, Inc., LLC

THOMAS A. KNOTH, J. WRAY BLATTNER, Thompson Hine LLP, 10050 Innovation Drive, Suite 400, Miamisburg, Ohio 45342, For Defendant-Appellee Laney, Directional Drilling Co.

JOSEPH P. KONCELIK, ANTHONY R. PETRUZZI, MELISSA Z. KELLY, Tucker Ellis LLP, 950 Main Avenue, Suite 1100, Cleveland, Ohio 44113-7213, For Defendant-Appellee Pretec, Directional Drilling, LLC

PHILIPS J. VALLAKALIL, Atlas Trenchless, LLC, 520 S. 6^th Avenue, Mansfield, TX 75054, KEVIN L. MURPHY, J. JEFFREY LANDEN, MICHAEL S. JONES, MURPHY LANDEN JONES PLLC, 2400 Chamber Center Drive, Suite 200, Fort Mitchell, KY 41017-0534, For Defendant-Appellee Atlas, Trenchless, LLC

JUDGES: Hon. William B. Hoffman, P.J., Hon. John W. Wise, J., Hon. Patricia A. Delaney, J.

OPINION

Hoffman, P.J. {¶1} Appellant State of Ohio, ex rel. Dave Yost, Ohio Attorney General, appeals the judgment of the Stark County Common Pleas Court dismissing its complaint against Appellees Rover Pipeline, LLC; Mears Group, Inc.; Pretec Directional Drilling, LLC; Laney Directional Drilling Co.; Atlas Trenchless, LLC; and B&T Directional Drilling, Inc.

STATEMENT OF THE CASE AND FACTS

{¶2} On July 19, 2018, Appellant filed a third amended complaint, the dismissal of which is the entry appealed from in the instant action. The complaint alleged Appellees illegally discharged millions of gallons of drilling fluids into Ohio's waters, causing pollution and degrading water quality across the state during construction of the Rover Pipeline, a 713-mile interstate natural gas pipeline crossing 18 Ohio counties. Appellee Rover was the owner/operator of the drilling operation for construction of the pipeline. The remaining Appellees were subcontractors hired by Rover to perform horizontal-directional drilling related to construction of the pipeline. Appellant sought civil penalties and injunctive relief.

{¶3} Specifically, Appellant's complaint alleged the following:

Count one: Appellees discharged pollutants (drilling fluids) into the waters of the state without point source NPDES permits.

Count two: Appellee Rover failed to obtain a necessary storm water permit for its storm water discharges.

Count three: Appellees violated Ohio's general water quality standards (unpermitted drilling fluid discharges and storm water discharges into waters of the state).

Count four: Appellees violated Ohio's wetland water quality standards by unpermitted drilling fluid discharges into wetlands.

Count five: Appellee Rover violated the Director of the EPA's orders by failing to obtain coverage or submit a notice of intent to obtain coverage for a Construction Storm Water Permit.

Count six: Appellee Rover violated the hydrostatic permit laws.

Count seven: Appellee Rover engaged in activity from February 14, 2017 through May 15, 2017, without the state 401 water quality certification.

{¶4} Appellees moved to dismiss the complaint pursuant to Civ. R. 12(B)(1) and (6), raising four basic arguments.

{¶5} First, Appellees argued Appellant's failure to act within one year on Rover's November 16, 2016, application for the State to issue a § 401 certification under the federal Clean Water Act resulted in the State waiving its power to impose conditions and enforce environmental requirements for the pipeline project as a matter of federal law.

{¶6} Second, Appellees argued Rover received all necessary regulatory approvals from FERC (Federal Energy Regulatory Commission). They argued Appellant participated in the preparation of an Environmental Impact Statement (EIS) as a part of the process of obtaining FERC approval, and failed to identify additional State permitting requirements through the EIS process.

{¶7} Third, Appellees argued the State's claims are preempted by the Natural Gas Act, and the trial court therefore lacked subject matter jurisdiction.

{¶8} Fourth, Appellees argued the State's claims are an improper collateral attack on FERC's orders approving the pipeline project.

{¶9} Appellant responded Counts 1-6 were not subject to Section 401 certification. As to Count Seven, Appellant argued waiver did not apply because Rover reapplied for Section 401 certification on February 23, 2017, and the State granted the revised request on February 24, 2017.

{¶10} The trial court granted Appellees' motion to dismiss on March 12, 2019. The court found by failing to act on Rover's November 16, 2015, request for 401 certification, Appellant waived its rights under the Clean Water Act. The court found the resubmission of the request for certification on February 23, 2017, did not save the State from waiver, as the request was resubmitted outside the one-year period for action on the initial submission.

{¶11} It is from the March 12, 2019 judgment of the trial court Appellant prosecutes this appeal, assigning as error:

I. THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT HELD THAT, UNDER THE CLEAN WATER ACT, 33 U.S.C. 1341, THE STATE OF OHIO WAIVED ALL OF ITS WATER POLLUTION AUTHORITY OVER ENVIRONMENTAL VIOLATIONS OCCURRING DURING THE CONSTRUCTION OF ROVER'S INTERSTATE PIPELINE.

II. THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT FOUND, IN A FOOTNOTE, THAT EVEN WITHOUT WAIVER, THE OTHER DEFENSES RAISED BY ROVER AND ITS CONTRACTORS INCLUDING PREEMPTION BARRED THE STATE OF OHIO'S COUNTS ONE THROUGH SIX.

I.

{¶12} Appellant argues the court erred in finding its failure to act in a timely manner on Rover's application for Section 401 certification waived its rights to enforce Ohio's Clean Water Act in regards to the violations alleged in Counts One through Six of its third amended complaint.¹

{¶13} The trial court dismissed the complaint pursuant to Civ. R. 12(B)(1), lack of subject matter jurisdiction and Civ. R. 12(B)(6), failure to state a claim upon which relief could be granted. An order granting a Civ.R. 12(B)(1) or a 12(B)(6) motion to dismiss is subject to de novo review. Moody v. Frazeysburg , 5th Dist. Muskingum No. CT2005-0037, 167 Ohio App.3d 106, 2006-Ohio-3028, 854 N.E.2d 212, ¶ 9 ; Perrysburg Twp. v. Rossford , 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5. In determining whether the plaintiff has alleged a cause of action sufficient to withstand a Civ.R. 12(B)(1) motion to dismiss, a court is not confined to the allegations of the complaint and may consider material pertinent to the inquiry without converting it into a motion for summary judgment. Moody, supra, citing Southgate Dev. Corp. v. Columbia Gas Transm. Corp. , 48 Ohio St.2d 211, 2 O.O.3d 393, 358 N.E.2d 526, paragraph one of the syllabus (1976).

{¶14} The Federal Clean Water Act specifically reserves to the states the right to adopt and enforce standards and requirements regarding pollutants in its waterways:

Except as expressly provided in this chapter, nothing in this chapter shall (1) preclude or deny the right of any State or political subdivision thereof or interstate agency to adopt or enforce (A) any standard or limitation respecting discharges of pollutants, or (B) any requirement respecting control or abatement of pollution; except that if an effluent limitation, or other limitation, effluent standard, prohibition, pretreatment standard, or standard of performance is in effect under this chapter, such State or political subdivision or interstate agency may not adopt or enforce any effluent limitation, or other limitation, effluent standard, prohibition, pretreatment standard, or standard of performance which is less stringent than the effluent limitation, or other limitation, effluent standard, prohibition, pretreatment standard, or standard of performance under this chapter; or (2) be construed as impairing or in any manner affecting any right or jurisdiction of the States with respect to the waters (including boundary waters) of such States.

{¶15} 33 U.S.C. 1370.

{¶16} Ohio has delegated to its Director of Environmental Protection the authority to promulgate rules and regulations, including issuing permits, concerning the discharge of pollutants into the State's waters. R.C. 6111.03. These rules and regulations are found in Ohio Administrative Code Chapter 3745.

{¶17} The Federal Clean Water Act further provides any project in which discharge of a pollutant into navigable waters occur must receive certification from the state in which the discharge will originate. This certification, referred to as the "401 certification," is governed by 33 U.S.C. § 1341(a)(1), which provides:

Any applicant for a Federal license or permit to conduct any activity

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