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Federal Court Rejects After-the-Fact EPA Veto of Army Corps of Engineer’s Water Quality Permit

April 16, 2012

The U.S. District Court for the District of Columbia has held that the U.S. EPA exceeded its authority under the Clean Water Act (CWA)[1] when it attempted to invalidate a permit the U.S. Army Corps of Engineers (Corps) had issued authorizing Mingo Logan Coal Company, Inc. (Mingo Logan) to discharge fill material from coal mining into nearby streams. A copy of the court’s opinion is here. EPA’s decision was the first time in the forty-year history of the Act that it had determined to “veto” a permit after it had been issued by the Corps. The Court concluded that the CWA does not give EPA the power to render a permit invalid once it has been issued by the Corps. If EPA has concerns about where a permit will allow a party to discharge pollutants, it must take action before the permit is issued. Businesses with CWA permits issued by the Corps may now look to the Mingo Logan case to support business decisions in reliance on the certainty of such permits once issued.

Clean Water Act Permitting Process

The CWA prohibits the discharge of a pollutant by any person, except in compliance with specified statutory requirements.[2] Under CWA Section 404, the Corps has authority to issue permits for the discharge of dredged or fill material to waters of the United States.[3] The Corps must choose the disposal site through application of EPA guidelines, but EPA has the final authority to prohibit a disposal site.[4] CWA Section 404(c) grants EPA the power to veto or restrict a CWA Section 404 permit if the discharge would have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishing areas, wildlife, or recreational areas.[5] CWA Section 404(c) also provides the EPA with authority to prohibit or restrict use of sites for discharges even if no permit application is pending. Courts have consistently given substantial deference to EPA when its CWA Section 404(c) vetoes have been challenged.[6] However, prior to the Mingo Logan case, no court had been called upon to determine whether EPA had authority to veto a disposal site after-the-fact of the Corps issuing a permit.

Case Background

Mingo Logan owns and operates the Spruce No. 1 mountaintop coal mine in Logan
County, West Virginia.[7] Mountaintop mining involves removing the top of a mountain to recover the coal within it.[8] This process generates excess rock, topsoil, and debris (spoil) that cannot be returned to the mined area.[9] Typically, these materials are deposited in adjacent valleys, creating valley fills.[10]

In 1998, Mingo Logan obtained a permit under the Surface Mining Control and Reclamation Act (“SMCRA”)[11] from the State of West Virginia. The original design called for the mine to discharge spoil in portions of several streams.[12] Mingo Logan also applied for and obtained a National Pollutant Discharge Elimination System (NPDES) permit under CWA Section 402 from the State of West Virginia. EPA initially opposed the proposed permit, but ultimately withdrew its objections.[13]

Mingo Logan also applied to the Corps for a CWA Section 404 permit, the subject of the litigation discussed in this article.[14] Mingo Logan sought to discharge material from the Spruce No. 1 Mine into the same streams addressed in its state mining permit.[15] The Corps began the process of developing an EIS for the project.[16] EPA commented on a preliminary draft EIS in August 2001 and a draft EIS in August 2002. In December 2005, the West Virginia Department of Environmental Protection granted state certification for the permit based on its determination that the project would not violate state water quality standards or anti-degradation regulations.[17] The Corps released the final EIS in September 2006, and EPA again submitted comments.[18] On January 22, 2007, the Corps issued Mingo Logan a CWA Section 404 permit for the Spruce project.[19] The permit authorized Mingo Logan to discharge dredged or fill material into the designated stream segments until December 31, 2031.[20]

On September 3, 2009 – almost two years after the Corps issued the Section 404 permit to Mingo Logan – EPA sent a letter to the Corps, requesting that it use its discretionary authority to suspend, revoke, or modify the permit on grounds that recent data and analyses had revealed downstream water quality impacts that were not adequately addressed by the permit.[21] The Corps rejected EPA’s request, finding no grounds to suspend, revoke, or modify the permit.[22]

Six months later, on March 26, 2010, EPA published a notice of its proposed determination to withdraw or restrict the specification of some of the applicable streams as disposal sites for fill material.[23] On January 13, 2011, EPA issued its Final Determination to “withdraw the specification of Pigeonroost Branch, Oldhouse Branch and their tributaries . . . as a disposal site for dredged or fill material in connection with the construction of the Spruce No. 1 Surface Mine . . . .”[24] The streams EPA sought to withdraw from specification as disposal sites make up roughly eighty-eight percent of the total discharge area authorized by Mingo Logan’s permit.[25]

Mingo Logan Suit and Circuit Court Decision

Mingo Logan brought suit under the Administrative Procedure Act (APA) seeking a declaration from the Court that EPA lacked the authority to modify or revoke Mingo Logan’s Section 404 permit, that its attempt to modify the permit was unlawful, and that the permit is still operative. In addition, Mingo Logan asked the Court to vacate EPA’s Final Determination on the grounds that it exceeded the agency’s statutory authority under CWA Section 404(c), and that it was arbitrary, capricious, and not in accordance with law for a number of reasons. Mingo Logan and EPA filed cross-motions for summary judgment.

The parties and the court all agreed that Congress gave EPA the right to step in and veto the use of certain disposal sites at the start, thereby blocking the Corps from issuing permits for those sites.[26] Stating, however, that “EPA’s attempt to withdraw the specification of discharge sites after a permit has been issued is unprecedented in the history of the Clean Water Act,” the Court concluded that EPA exceeded its authority under CWA Section 404(c) when it attempted to invalidate an existing permit by withdrawing the specification of certain areas as disposal sites after the Corps had issued Mingo Logan a permit under CWA Section 404(a). EPA had taken the position that CWA Section 404(c) granted it authority to unilaterally revoke or modify a permit issued by the Corps at any time.[27] Based on considering the provision in question, the language and structure of the entire statutory scheme, and the legislative history, the Court concluded that the statute does not give EPA the power to render a permit invalid once it has been issued by the Corps. “EPA’s view of its authority is inconsistent with clear provisions in the statute, which deem compliance with a permit to be compliance with the Act, and with the legislative history of section 404.” The Court held that it could deem EPA’s action to be unlawful without venturing beyond the first step of the two-step analysis called for by Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.[28]

The Court further concluded, however, that “it is undeniable that the provision in question [CWA Section 404(c)] is awkwardly written and extremely unclear.” Therefore, the Court went on to rule – under the second step of the Chevron analysis – that even if the absence of a clear grant of authority to EPA to invalidate a permit is seen as a gap or ambiguity in the statute, and even if the Court accords the agency some deference, EPA’s interpretation of the statute to confer this power on itself is not reasonable. The Court held that “neither the statute nor the Memorandum of Agreement between EPA and the Corps makes any provision for a post-permit veto, and the agency was completely unable to articulate what the practical consequence of its action would be.”

Mingo Logan argued that it should be able to rely on a valid permit issued by the Corps and that EPA’s interpretation of its authority runs counter to the unambiguous Congressional directive embodied in the CWA. The Court agreed, writing that “[i]n short, the Clean Water Act deems any discharges made without a permit to be unlawful, but it also expressly provides that discharges made pursuant to a permit are lawful.”[29] On these grounds, therefore, the Court granted Mingo Logan’s motion for summary judgment.

EPA is discussing with the Justice Department and the Office of General Counsel whether to appeal the District Court’s decision.[30] Several environmental groups, including the Sierra Club and Earthjustice are urging EPA to appeal.[31]

The Mingo Logan decision resolves a previously open question about the relationship between the EPA and the Corps in administering CWA Section 404 permits. Under the decision, EPA’s role in specifying whether a disposal site is valid ends when the Corps issues the permit. After that point, EPA no longer has authority to veto the permit and the permitted party can then rely on the permit as issued. The decision provides greater certainty to a broad range of businesses that operate under CWA Section 404 permits, including those in the construction and mining industries.

For more information on Marten Law’s water quality and Clean Water Act practice please contact Jeff Kray.

[1] 33 U.S.C. § 1251 et seq.

[2] 33 U.S.C. § 1311(a).

[3] 33 U.S.C. § 1344.

[4] 33 U.S.C. § 1344(c).

[5] Id.

[6] James City County v. EPA, 12 F.3d 1330 (4th Cir. 1993); Bersani v. EPA, 850 F.2d 36 (2nd Cir. 1988).

[7] Opinion at p. 3.

[8] Id.

[9] Id.

[10] Id.

[11] 30 U.S.C. § 1201, et seq.

[12] Opinion at p. 3.

[13] Id.

[14] Opinion at p. 4.

[15] Id.

[16] Id.

[17] Opinion at p. 5.

[18] Id.

[19] Opinion at p. 6.

[20] Id.

[21] Opinion at p. 7.

[22] Id.

[23] Id.

[24] Opinion at pp. 7-8.

[25] Id.

[26] Opinion at pp. 11-12, citing 33 U.S.C. § 1344(c).

[27] Opinion at p. 10.

[28] 467 U.S. 837 (1984).

[29] Opinion at p. 16, citing 33 U.S.C. § 1344(p); Natural Res. Def. Council v. EPA, 822 F.2d 104, 111 (D.C. Cir. 1987).

[30] Manuel Quinones, Stymied in Senate, industry looks to courts to limit EPA oversight (E&E Reporter, April 9, 2012)(subscription required).

[31] Manuel Quinones, Judge scraps EPA veto, greenlights W.Va. mountaintop coal project (E&E Reporter, March 23, 2012)(subscription required).

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