Uncertainty In Clean Water Act Permitting Continues

Does The EPA Administrator Have Final Say On Specified Disposal Sites?

By Carolyn McIntosh

American businesses – and the economy as a whole – need certainty and stability to grow and foster job creation. Yet, the United States Environmental Protection Agency (EPA) continues its efforts to modify the permitting regime under the Federal Water Pollution Control Act (Clean Water Act or CWA), 33 U.S.C. §§1251, et seq., to implement the administrations’ policy to shift American energy consumption from coal to renewable energy.

The courts have generally stymied EPA’s overreaching efforts over the last year. However, Mingo Logan Coal Co. v. United States Environmental Protection Agency, D.C. Cir. (No. 12-5150, 4/23/13), is a significant departure from that trend and destabilizes the CWA §404 dredge-and-fill permitting program. In Mingo Logan, the U.S. Court of Appeals for the District of Columbia Circuit reversed a lower court decision (Mingo Logan Coal Co. v. U.S. EPA, 850 F. Supp. 2d 133 (D.D.C. 2012)) and held that EPA can veto a dredge-and-fill permit properly issued by the United States Army Corps of Engineers (Corps), years after the fact.

The appeals court ruled “the [EPA] Administrator has, in effect, the final (emphasis in original) say on the specified disposal sites ‘whenever’ he makes the statutorily required ‘unacceptable adverse effect’ determination.”

The Corps issued the §404 permit in January 2007, authorizing Mingo Logan to discharge mine fill material into three West Virginian streams and their tributaries. EPA expressed some concerns, but did not exercise its authority under CWA §404(c) to reject the discharge site selection. Accordingly, the Corps issued the permit.

In 2009, EPA asked the Corps to suspend, revoke or withdraw the permit under 33 CFR 325.7. The Corps declined. Four years after permit issuance, EPA found problems with the permit’s authorization of two of the streams designated as disposal sites and invoked its subsection 404(c) authority to “withdraw” the specifications for these two streams as disposal sites.

Mingo Logan challenged the EPA withdrawal on two grounds: 1) that EPA lacks statutory authority to withdraw site specification after a permit has issued; and 2) EPA’s decision to do so was arbitrary and capricious in violation of the Administrative Procedure Act (“APA”),

5 U.S.C. §§ 701, et. seq. The U.S. District Court for the District of Columbia granted summary judgment on the first ground without reaching the second basis for Mingo Logan’s challenge.

EPA Appeal
The EPA appeal was heard by a three-judge panel and the opinion was rendered by Circuit Judge Karen LeCraft Henderson. In the Court of Appeals’ de novo review of the lower court’s grant of summary judgment, the D.C. Circuit applied Chevron deference (Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc., 467 U.S. 837 (1984)), but only engaged in step 1 of that analysis, finding that the relevant provision of the CWA, §404(c), is unambiguous. The D.C. Circuit acknowledged that CWA §404 vests the Corps – not EPA – with the authority to issue dredge-and-fill permits and to specify the disposal sites therefor.

Nonetheless, the Court adopted EPA’s argument that “Congress granted EPA a broad environmental backstop authority over the Secretary’s discharge site selection in subsection 404(c).”

Relying heavily on Congress’s use of the term “whenever” in §404(c), the Court found that there is no temporal limitation on EPA’s authority to veto selection of a disposal location. The Court supported this analysis, again adopting EPA’s argument, by finding that “withdrawal” also suggests EPA may exercise its authority post-permit issuance.

Further, the Court expressly rejected Mingo Logan’s argument that “EPA’s interpretation conflicts with section 404 ‘as a whole’” by Congress’s grant of permitting authority to the Corps and inclusion of the “permit shield” provision in §404(p). The case has been remanded to the district court to determine the second basis for Mingo Logan’s challenge, whether EPA’s veto was arbitrary and capricious.

Legislative Solution?
A legislative solution may be in the offing – a bipartisan group of senators has reintroduced legislation, the EPA Fair Play Act (S. 830), that would prohibit EPA from vetoing CWA §404 permits already issued by the Corps. That the effort is bi-partisan at the outset gives it some prospect of becoming law.

A similar measure passed the House in 2011 and was reintroduced, also on a bipartisan basis in the House, May 13, 2013, as the Clean Water Cooperative Federalism Act of 2013. Rather than prohibit EPA from vetoing an issued dredge-and-fill permit, the House bill would preclude EPA veto without state agreement.

Rep. Nick Rahall, one of the bill’s sponsors, is the ranking member of the House Transportation and Infrastructure Committee, where it is likely to be heard soon. The Obama Administration threatened veto of the 2011 House measure and is expected to maintain that position if either of these bills is adopted.

Negotiation of Terms
In the meantime, careful negotiation of permit terms still provides the best protection. As a further ground for its decision, the D.C. Circuit cited to a provision in the Mingo Logan permit in which the Corps reserved the right to “reevaluate its decision on the permit at any time the circumstances warrant” stating that “[s]uch a reevaluation may result in a determination that it is appropriate to use the suspension, modification and revocation procedures contained in 33 CFR 325.7.” (Dep’t of the Army Permit No. 199800436-3.)

Thus, one possible way to avoid or minimize a Mingo Logan revocation may be careful review and negotiation of permit conditions to preclude or constrain the conditions warranting future revocation. An audit of existing dredge-and-fill permit provisions is also recommended and should be the norm in any asset acquisition context.

Early engagement with EPA may mitigate permit risks. For example, in Ohio Valley Envtl. Coalition, Inc. v. United States Army Corps of Eng’rs, 2013 U.S. App. LEXIS 9753, 2013 WL 1987234 (4th Cir. W. Va. 2013) the Fourth Circuit upheld the §404 permit, in part due to the Corps’ inclusion of EPA-requested permit conditions and mitigation.

Carolyn McIntosh, a partner with Patton Boggs, counsels clients on complex environmental-compliance matters, and environmental and natural-resources litigation. In addition to her environmental litigation and regulatory work, she counsels a variety of companies in area of renewable energy and clean technology. 303-894-6127, [email protected].


Related posts