Supreme Court to Resolve Conflict between Clean Water Act Permitting Schemes

The United States Supreme Court has agreed to resolve a conflict between two different permitting systems under the Clean Water Act (“CWA”). Consolidating two cases, State of Alaska v. Southeast Alaska Conservation Council (No. 07-990) and Coeur Alaska, Inc. v. Southeast Alaska Conservation Council (No. 07-984), the Court granted certiorari to hear the consolidated cases in its next term.[1] The case presents the question of which CWA permitting regime will apply to the discharge of mining spoils into navigable waters: § 404 of the CWA, which is primarily administered by the U.S. Army Corps of Engineers (“Corps”), or § 402 of the CWA, which is administered by the Environmental Protection Agency (“EPA”) or those states where the § 402 permitting program has been delegated. The difference matters because the § 402 effluent and performance standards are broader than the § 404 standards.

Under § 404, the Corps may issue permits for discharges of “fill material,” which are subject to the water-quality restrictions imposed by § 404(b)(1). Under § 402, the EPA may issue permits for the discharge of all other pollutants, subject to the effluent limitations prescribed under §§ 301 and 306. The discharges that were the subject of the lawsuit were originally permitted by the Corps under § 404 and allowed Coeur Alaska, Inc. (“Coeur Alaska”) to dispose of gold mine tailings by discharging them into a lake. EPA concurred with this permit. The permit was challenged by environmental groups, who argued that the effluent regulations in §§ 301 and 306 governed the discharge of mine tailings and had precedence over the Corps’ § 404 permit. In resolving that dispute, the Ninth Circuit held that the plain language of the CWA required that the discharges comply with the standards of performance issued by EPA under §§ 301 and § 306 of the CWA (i.e., those standards applicable to § 402 permits), and vacated the § 404 permit.[2]

Coeur Alaska and the State of Alaska sought certiorari, contending that the § 404 and § 402 permitting schemes are mutually exclusive: “[The CWA] entrusts to the Corps of Engineers the authority to issue permits ‘for the discharge of … fill material into the navigable waters,’ while the authority to issue permits for all pollutants other than ‘fill material’ rests with EPA.”[3] The petitioners pointed to the fact that § 404(p) provides that “[c]ompliance with a permit issued pursuant to [§ 404] … shall be deemed compliance … with [Section 301].”[4] Discharges that fall under Section 402 … must meet “all applicable requirements” under Sections 301 and 306 of the Clean Water Act, including compliance with “[e]ffluent limitations” applicable to existing point sources,[5] while § 306 applies more stringent effluent limitations, known as “standards of performance,” to new point sources.[6]

The Supreme Court granted Coeur Alaska’s and the State of Alaska’s petition for certiorari in June 2008, over the objection of the Department of Justice.  

Factual Background

The Corps initially issued a § 404 permit to Coeur Alaska in June 2005 in connection with the company’s proposed Kensington Gold Mine project. Coeur Alaska intended to construct and operate a froth-flotation mill facility to separate gold from ore-bearing rock. Following extraction of the gold, the company proposed to dispose of approximately 4.5 million tons of mine tailings contained in process wastewater over the life of the mine. The company originally planned on disposing of the mine tailings on dry uplands and revegetating the disposal area following closure of the mine. In 2004, however, Coeur Alaska revised its disposal plan to directly discharge the mine tailings into nearby Lower Slate Lake, located in the Tongass National Forest. As conceived, the proposed discharge would raise the bottom of the lake 50 feet, and would adversely affect all fish and nearly all aquatic life in the lake.[7]

The Forest Service approved the project in a Record of Decision issued in December 2004, following preparation of a Final Supplemental Environmental Impact Statement. In June 2005, the Corps issued a § 404 permit to Coeur Alaska, reasoning that the CWA’s dredge and fill permit program, rather than the CWA’s effluent discharge permit program, applied to Coeur Alaska’s planned discharges, because the proposed tailings discharge would have the effect of raising the lake’s bottom elevation.[8]

The District Court and Ninth Circuit Decisions

In September 2005, environmental groups brought suit challenging the Corps’ authority to issue a permit for the discharge of the process wastewater into Lower Slate Lake. The plaintiffs argued that EPA’s previously promulgated performance standards under § 301 and § 306 prohibited such discharges.  After the complaint was filed, the Corps decided to suspend the permit and reconsidered its decision to issue the permit, requesting a voluntary remand of the case before briefing on the merits began, which the district court granted. Following reconsideration, the Corps reinstated the original permit, without changes, and issued a revised record of decision in which it explained its rationale.[9] The plaintiffs filed an amended complaint in response. Coeur Alaska, Goldbelt, Inc. and the State of Alaska intervened as defendants. On August 4, 2006, the district court granted summary judgment to defendants, holding that the Corps had authority to issue the § 404 permit for the discharge of mine tailings into Lower Slate Lake.[10]

Reviewing that decision on appeal, the Ninth Circuit turned to the CWA’s plain language, holding that CWA §§ 301 and 306 unambiguously require dischargers to comply with applicable effluent limitations and standards of performance, and do not contain any exception for discharges that otherwise qualify for regulation under CWA § 404 as dredged or fill material. Given this clear language, the Ninth Circuit determined that CWA §§ 301 and 306 applied to the proposed mine tailing discharge into Lower Slate Lake.[11]

The court also found support for its interpretation of the CWA in the agencies’ own interpretation of “fill material.”[12] At the time the Corps and EPA adopted their joint definitions of “fill material” and “discharge of fill material,” they emphasized that the rule would not change “any determination that we have made regarding discharges that are subject to an effluent limitation guidelines and standards, which will continue to be regulated under section 402 of the CWA.”[13] Consequently, the Ninth Circuit concluded that the agencies themselves did not intend for the definition of “fill material” to replace EPA’s performance standard for froth flotation mills. Based on this determination, the Ninth Circuit held that a permit under § 402 of the CWA was a prerequisite for the discharge into Lower Slate Lake.

The Ninth Circuit reversed the district court’s decision and remanded the case to the district court to vacate the mine tailings permit issued by the Corps pursuant to § 404. The court also vacated a second permit issued to Goldbelt, Inc. for construction of the associated Cascade Point Marine Facility and the Forest Service’s Record of Decision approving the general plan, because both actions depended upon the validity of the Corps’ § 404 permit to Coeur Alaska.

The CWA Statutory Scheme

In general, two types of discharges are regulated as part of the CWA regulatory structure. First, the CWA regulates the discharge of fill or dredged material into waters of the United States pursuant to permits issued by the Corps under § 404,[14] which provides that the Corps “may issue permits … for the discharge of dredged or fill material into the navigable waters” under guidelines developed jointly by the Corps and EPA.[15] The Corps’ and EPA’s regulations define “fill material” for purposes of § 404 as “material placed in waters of the United States where the material has the effect of: i) replacing any portion of a water of the United States with dry land; or ii) changing the bottom elevation of any portion of a water of the United States.”[16] Examples of fill material include rock and “overburden from mining and other excavation material.”[17] In addition, the term “discharge of fill material” refers to the “addition of fill material into waters of the United States,” including the placement of overburden, slurry, or tailings or similar mining-related materials”[18]

The EPA administers a second and separate permitting system under CWA § 402, applying effluent limitations and performance standards issued pursuant to §§ 301 and 306. Under this permitting program, those who discharge pollutants from a point source into waters of the United States are required to obtain a permit from EPA, or the state if it has been delegated permitting authority.[19] Discharges pursuant to a permit issued under § 402 must comply with applicable EPA-established “effluent limitations” under CWA § 301 for existing sources, and “performance standards” under § 306 for new sources.[20] Of particular relevance to Coeur Alaska’s mine tailing discharge plan are performance standards issued by EPA under both §§ 301 and 306 of the CWA that prohibit “the discharge of process wastewater to navigable waters from mills that use the froth-flotation process alone, or in conjunction with other processes, for the beneficiation of … gold, silver or molybdenum ores or any combination of these ores.”[21]

By its express language, § 402 appears to provide that § 404 permits would take precedence over those issued under § 402: “[e]xcept as provided in section[] * * * 1344 of this title[i.e., Section 404 of the CWA], the Administrator [of EPA] may * * * issue a permit for the discharge of any pollutant, or combination of pollutants * * * upon condition that such discharge will meet * * * all applicable requirements under sections 1311, 1312, 1316, 1317, 1318, and 1343 of this title.”[22] Based on this language, the State of Alaska and Coeur Alaska argued that the two permit regimes were mutually exclusive: “Under Section 404, the Corps may issue permits for the discharge of ‘dredged or fill material,’ whereas under Section 402 EPA may issue permits for the discharge of pollutants ‘[e]xcept as provided in [Section 404].’”[23] Section 404 does provide EPA with a veto power over permits issued by the Corps pursuant to that section, if EPA determines that a particular discharge “will have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas …, wildlife, or recreational areas.”[24]

The states also play a role in both the § 404 and § 402 permitting schemes. In order to receive a permit under either § 402 or § 404, an applicant must obtain a “certification from the State in which the discharge originates … that any such discharge will comply with” applicable federal and state laws.[25] The State of Alaska relied on the § 401 certification requirement to argue that it had “an independent interest in ensuring the proper application of the CWA.”[26] In addition, in a number of states, administration of the permit program has been delegated to the states, which issue and monitor compliance with those permits.

Petitions for Certiorari

Coeur Alaska sought certiorari in order to reverse the Ninth Circuit’s decision, arguing that the decision would “effectively rewrite the structure of the Clean Water Act: It changes the Section 404 permit program from a distinct permitting scheme that carves out an important exception to Section 402, into a secondary permitting scheme that has only residual application.”[27] Coeur Alaska contended that, unless overturned, the Ninth Circuit’s decision would destroy the national uniformity in the administration of the CWA based on the division of labor established by the Corps and EPA. In addition, it argued that the new requirements imposed by the Ninth Circuit would restrict the mining industry’s ability to conduct a common type of ore processing, thereby weakening the economies of many states that rely on mining as a significant component of their economic base.[28]

The State of Alaska joined with Coeur Alaska in requesting certiorari. The State argued that the Ninth Circuit’s decision ran counter to prior decisions of the U.S. Supreme Court, the administrative regulations promulgated by the two agencies, and other circuit court decisions. The State cited the Supreme Court’s relatively recent decision in Rapanos v. United States[29]as authority that the Court had read the permitting program under § 402 as “providing a separate permitting programfor such discharges in § 1344(a) [CWA § 404(a)].”[30] The State also argued that EPA’s and the Corps’ disposition of Coeur Alaska’s permit application and their administration of the CWA was entitled to Chevron deference.[31] Alaska further argued that other circuit courts have recognized that §§ 404 and 402 are mutually exclusive permitting schemes and that fill material is regulated by the Corps’ § 404(b)(1) guidelines rather than by EPA’s § 402 effluent guidelines.[32] Finally, both Coeur Alaska and the State maintained that the case presented issues of national significance, based on the implications for the administration of the CWA,[33] and the potential economic impact on the mining industry.[34]

Taking an interesting litigation position, the United States opposed certiorari, even while agreeing with Coeur Alaska and the State of Alaska that the Ninth Circuit’s decision was in error. Notwithstanding that concession, the government argued that there was no division among the courts of appeals on that question and also contended that the issues were not sufficiently important to warrant Supreme Court review. Despite opposing the petition, the United States nonetheless stated that, if the Court were to grant certiorari, it would support the petitioners’ reading of the CWA.[35]

Conclusion

The Supreme Court’s resolution of the issues presented by the case will have significance far beyond the case itself, since it will, of necessity, require a reading of the CWA that determines whether § 404 permits have primacy over those issued under § 402, or whether compliance with the effluent and performance standards of §§ 301 and 306 is necessary for any discharge to navigable waters. The Court’s ruling will clarify the scope of Corps’ jurisdiction over discharges to waters of the United States and operations that result in discharges regulated under CWA §§ 301 and 306, even though those discharges would otherwise fall within the Corps’ permitting scheme. It is possible that the Supreme Court’s decision in this case will also serve to provide guidance concerning the scope of CWA jurisdiction, which is in need of clarification after the Court’s last look at § 404 jurisdiction in the Rapanos case.

No date for argument has been set.

For more information please contact Steve Jones.