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District Court Says EPA Cannot Shortcut Rulemaking Process by Issuing Interpretive Guidance

February 3, 2011

Industry watchers were cheered by a January 14th U.S. District Court ruling that EPA likely exceeded the bounds of its statutory authority and violated the Administrative Procedure Act (“APA”) by relying on interpretive guidance – rather than a regulation – to establish protective standards under environmental laws. National Mining Ass’n v. EPA (“National Mining”).[1] EPA had sought by interpretive guidance to direct review of Clean Water Act (“CWA”) permits for so-called mountain-top removal coal mining. Specifically, plaintiff National Mining Association (“NMA”) argued that EPA used interpretive guidance to implement water-quality standards for “conductivity” levels for streams impacted by coal mining and to create a “extra-regulatory” review process to identify certain permits for more stringent environmental review. The NMA filed suit and sought a preliminary injunction. The district court did not grant the injunction, but it did conclude that the NMA “established that it will likely succeed in showing that the EPA exceeded its authority under the [CWA] by adopting and implementing the [guidance].”[2] The broader implication of the court’s ruling is that EPA cannot shortcut the administrative process by using guidance in lieu of regulations to change environmental rules.

Statutory Background

National Mining has to do with CWA permits for coal-mining activities in Appalachia. Coal-mining activities generally require permits issued under Sections 402 and 404 of the CWA. CWA § 402 permits, better known as National Pollutant Discharge Elimination System (“NPDES”) permits, limit the type and quantity of pollutants that may be discharged from a point source to waters of the United States. Those permits incorporate water-quality standards, which are addressed under CWA § 303. Water-quality standards set out water-quality goals for different water bodies by designating uses for the water bodies and setting narrative or numeric criteria for pollutants that are necessary to protect those uses. Most states, including the states at issue in National Mining, have sought and received authority from EPA to implement the NPDES permitting program; however, EPA retains limited authority to review a NPDES permit issued by a state.[3] CWA § 303(c) also requires these states to develop water quality standards for a range of contaminants, review and update those standards every three years, and submit the standards to EPA for review and approval.[4] If EPA finds that a state’s criteria proposal is inadequate, it must give the state notice and an opportunity to address EPA’s concerns. If the state fails to do so, EPA is required to propose a federal standard that will apply to that state. Similarly, if EPA, independent of any state proposal, determines that a state needs a new or revised standard, and the state fails to act, the CWA directs EPA to propose the new or revised standard for that state.[5] The U.S. Army Corps of Engineers (“Corps”) regulates discharges of dredged or fill material to “navigable waters” under CWA § 404.[6] The Corps has sole authority to issue § 404 permits;[7] however, it must do so according to guidelines developed in conjunction with EPA.[8] Otherwise, EPA retains a limited veto power over the Corps § 404 permitting decisions.[9]

Background to the National Mining Case

In June 2009, EPA and the Corps jointly issued an “enhanced coordination memorandum” to “facilitate” review of pending § 404 permits for 108 coal mines (“EC Memo”).[10] The EC Memo set up a two-step process between EPA and the Corps, under which EPA would identify pending applications that “raised environmental concerns and thus warranted further environmental review and coordination.”[11] EPA subsequently concluded that 79 of the 108 pending § 404 permits warranted further review.[12]

In April 2010, EPA issued an “interim guidance” document intended to “provide further clarification of EPA’s roles and expectations” in coordinating with EPA’s federal and state partners and to ensure “more consistent, effective, and timely compliance of Appalachian surface coal mining operations” with the CWA and other environmental laws (“Guidance Memo”).[13] The Guidance Memo applied to both § 404 and § 402 permits, and (among other things) identified acceptable “conductivity” levels for streams impacted by coal mining.[14] EPA made clear that it expected decision-makers (i.e., the States – who issue NPDES permits, and the Corps – who issues § 404 permits) “to begin using th[e] interim final guidance” in the document “immediately” in their review of surface coal mining permits.[15] The Guidance Memo asserted, however, that EPA’s guidance did not substitute for the legally binding provisions of the CWA and that the Guidance Memo was not “a regulation itself.”[16]

NMA filed suit against EPA and the Corps challenging the EC and Guidance Memos (collectively, the “Memos”). NMA attacked the EC Memo as imposing substantive changes to the § 404 permitting system by creating a new level of EPA review that was not contemplated under the CWA.[17] NMA challenged the Guidance Memo on three grounds, arguing that EPA: (1) had effectively established new water quality standards for conductivity; (2) was using the process to cause permitting delays; and (3) had caused permitting authorities to insert conductivity standards into pending permits.[18]

The Court’s Ruling

NMA moved for a preliminary injunction to set aside and enjoin the implementation of the Memos, while EPA and the Corps (collectively, the “Agencies”) moved to dismiss the case. The court rejected both the Agencies’ motion to dismiss and NMA’s request for a preliminary injunction; however, (and more importantly) the court also signaled that NMA was likely to succeed on the merits at trial because EPA had likely exceeded its statutory authority and had violated the APA.

NMA advanced two reasons why it was likely to succeed on the merits: (1) EPA’s actions were “legislative rules” subject to the APA’s notice and comment requirements; and (2) EPA had exceeded its statutory authority under the CWA. A legislative rule is agency action which has the “force and effect of law”[19] and works substantive changes or additions to prior regulations.[20] “If an agency adopts a new position inconsistent with an existing regulation, or effects a substantive change in the regulation, notice and comment are required” pursuant to the APA.[21] Further, when issuing a legislative rule, an agency must comply with the APA’s requirement that the public be given the opportunity for notice and comment. Relying on these standards, the court determined that the Memos constituted legislative rules that violated the APA’s notice and comment procedures because they altered the administrative review process for CWA permits and adopted a new position inconsistent with prior practice.[22]

With respect to its second argument – that EPA had exceeded its statutory authority under the CWA – NMA first argued that the Memos violated the “congressional statutory division of authority” between EPA and the Corps set out in CWA § 404 by illegally expanding EPA’s role in § 404 permitting decisions. Second, NMA argued that the Guidance Memo effectively imposed a new water-quality standard (for conductivity) on § 402 permits, thereby violating the state’s role in developing water-quality standards. The court agreed on both counts. “It seems clear … that Congress intended EPA to have a limited role in the issuance of § 404 permits, and that nothing in [CWA § 404] gives EPA the authorization to develop a new evaluation or permitting process which expands its role.”[23] Similarly, the court concluded that, by effectively adopting a new conductivity water quality standard, EPA had “encroached upon the role carved out for the states” under the CWA.[24]

Although the court concluded that NMA was likely to succeed on the merits, the court ultimately held that an injunction was inappropriate because NMA had failed to show that irreparable harm would result if the injunction did not issue.[25]

The Agencies sought to dismiss NMA’s suit on three grounds: (1) lack of final agency action; (2) ripeness; and (3) standing.[26] To appeal agency action under the APA, the action must not only “mark the consummation of the agency’s decision-making process,” but also be one under which “obligations have been determined, or from which legal consequences must flow.”[27] The Agencies argued that the Memos were merely guidance and did not represent final agency action, because they did not grant or deny the CWA permits at issue. The court rejected the Agencies’ “narrow” view of what constitutes final agency action, concluding that “it is possible for an agency to take final agency actions during a permit assessment process prior to actually determining whether to grant or deny an application for a permit.”[28] The court found that the EC Memo satisfied the first prong because it was clear “that the EPA has implemented a change in the permitting process.”[29] The EC Memo also satisfied the second prong because the “reworking” of the permit process “gives rise to legal consequences” for companies seeking the permits to operate.

The court found the Guidance Memo a closer call, but rejected the Agencies’ assertions that Memo was merely an interim document. “[I]t is nonetheless being applied in a binding manner and has been implemented in its current version.”[30] The court also concluded that the Guidance Memo also satisfied the second prong because of the “practical impact” imposed on permit applicants.[31] The decision similarly disposed of the Agencies’ ripeness and standing arguments, holding that it “seemed clear” that the EC Memo had imposed “additional processes” that were not “contemplated or set forth in the [§ 404] guidelines” and that the Guidance Memo was being applied in a binding manner. For these reasons, the court rejected the motion to dismiss.


Although the court did not conclusively rule that EPA overstepped its CWA authority in issuing and insisting on reliance with interim guidance documents, the court clearly signaled its intention to do so in the upcoming trial. EPA has, in recent years, tended to favor the use of interpretive guidance where it can, as the rulemaking process is typically long and arduous. No matter, this district court has held that it may be the only path available to change the rules.

For more information regarding, contact any member of Marten Law’s Water Quality practice.

[1] A copy of the slip opinion may be found here. All page references in this article are to the Slip Opinion.

[2] NMA, Slip op. at 21.

[3] See 33 U.S.C. § 1342(d).

[4] 33 U.S.C. § 1313(c)(2)(A); see 40 C.F.R. § 131.20.

[5] 33 U.S.C. § 1313(c)(4).

[6] See 33 U.S.C. § 1344.

[7] 33 U.S.C. § 1344(a).

[8] 33 U.S.C. § 1344(b).

[9] 33 U.S.C. § 1344(c).

[10] See EPA/Corps, Enhanced Surface Coal Mining Pending Permit Coordination Procedures (June 11, 2009) (“EC Memo”), available here; see also EPA Motion to Dismiss, at 8.

[11] EPA Motion to Dismiss, at 8.

[12] EPA Motion to Dismiss, at 9.

[13] EPA, Detailed Guidance: Improving EPA Review of Appalachian Surface Coal Mining Operations under the Clean Water Act, National Environmental Policy Act, and the Environmental Justice Executive Order (Apr. 1. 2010) (“Guidance Memo”), available here.

[14] EPA’s Guidance Memo stated the following regarding conductivity:

As a general matter, EPA expects that the conductivity impacts of projects with predicted conductivity levels below 300 ?S/cm generally will not cause a water quality standard violation and that in-stream conductivity levels above 500 ?S/cm are likely to be associated with adverse impacts that may rise to the level of exceedances of narrative state water quality standards. If water quality modeling suggests that in-stream levels will exceed 500 ?S/cm, EPA believes that reasonable potential likely exists to cause or contribute to an excursion above applicable water quality standards; unless, based on sitespecific data, the state has an alternative interpretation of their water quality standards that is supported by relevant science. Similarly, if water quality monitoring suggests that in-stream levels will exceed 300 ?S/cm but will be below 500 ?S/cm, EPA should work with the permitting authority to ensure that the permit includes conditions that protect against conductivity levels exceeding 500 ?S/cm. In circumstances where conductivity levels in waters proposed for new mining related discharges already exceed 500 ?S/cm, EPA will coordinate with the permitting authority on a site-specific basis to ensure these new discharges will not cause or contribute to a violation of water quality standards. Once EPA’s draft conductivity report is finalized following SAB review, we will evaluate whether changes to the conductivity benchmarks identified here are appropriate.

Guidance Memo, at 12 (footnote omitted).

[15] Guidance Memo, at 2.

[16] Guidance Memo, at 2 n.3.

[17] NMA, Slip op. at 4.

[18] Id. at 4.

[19] Id. at 18 (quoting Appalachian Power Co. v. EPA, 208 F.3d 1015, 1020 (D.C. Cir. 2000)).

[20] Id. at 18 (citing U.S. Telecom. Ass’n v. FCC, 400 F.3d 29, 34-35 (D.C. Cir. 2005)).

[21] Id. at 18.

[22] Id. at 19.

[23] Id. at 20.

[24] Id. at 20.

[25] Id. at 29.

[26] Id. at 6.

[27] Id..at 6 (quoting Bennett v. Spear, 520 U.S. 154, 177-78, 117 S. Ct. 1154 (1997)).

[28] Id. at 11.

[29] Id. at 11.

[30] Id. at 12.

[31] Id. at 13.

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