Court Allows EPA to Stop Ongoing Projects, Years After Permits Were Granted

Daily Journal

In 2007, Mingo Logan Coal Company received a Clean Water Act permit from the U.S. Army Corps of Engineers to discharge dredged or fill material from a mountain top coal mine in West Virginia into three streams. Four years later, the U.S. Environmental Protection Agency overturned the permit, saying it was no longer valid based on "new information" about the impact of the discharge on "downstream water quality."

On April 23, the D.C. Circuit Court of Appeals upheld EPA's action. Mingo Logan Coal Company v. U.S. Environmental Protection Agency, No. 12-5150. The court found the CWA allows EPA to veto a properly issued Corps permit "whenever [EPA] determines" the discharge will have an "unacceptable adverse effect" on the environment.

Section 404(a) of the CWA authorizes the Corps to issue permits to discharge dredged or fill material into "navigable waters." To issue such a permit, the Corps must find, among other things, that the permit is in the "public interest." Applying this test, the Corps issued a Section 404 permit to Mingo Logan for the discharge of mining waste into the West Virginia streams.

Section 404(c) of the CWA authorizes EPA to veto a Corps decision to allow the disposal of dredged or fill material into waters subject to that Act. When EPA first reviewed the proposed Mingo Logan permit, EPA expressed concern that "even with the best practices, mountaintop mining yields significant and unavoidable environmental impacts." Nevertheless, EPA did not veto the permit when it was issued by the Corps. Four years later, EPA decided "new information" required EPA to invalidate the permit for two of the three streams.

Not surprisingly, Mingo Logan argued it had a final permit on which it was entitled to rely. EPA cited Section 404(c) of the CWA, which authorizes EPA to veto a Corps permit "whenever" EPA determines there is an "unacceptable adverse effect" on the environment. The court focused on the word "whenever," holding it imposed no time limit on EPA's authority to overturn permits. Because of the statutory language, the court's decision may seem unremarkable in its construction of the CWA.

However, the court's decision calls renewed attention to a statutory provision whose potential for changing the regulatory landscape is enormous, particularly given new and proposed administration policies on environmental regulation. Recall first that the basis for EPA's veto was "new information." Every project opponent is now reminded that it can always submit "new information" and ask EPA to stop ongoing projects that have relied on the validity of a Corps permit. And each presidential election, or even a change of senior EPA leadership, presents new opportunities for project opponents. For permit recipients, including ports, mining operations, dam operators, and others who rely on CWA permits for continuing operations, the court's decision is a reminder that investment decisions and economic plans can be reversed. This economic reality could affect decisions on whether to actually invest money to move a project forward.

Complicating the effect of the court's decision is Executive Order 13547 issued in July 2010. That executive order directs all federal agencies to employ a precautionary approach in environmental decision-making. Specifically, it says that if there could be "serious" environmental impacts from a project, the absence of complete scientific information about those impacts is not a bar to protective regulation. Reasonable people can, of course, disagree about what is a "serious" problem. However, in the hands of a zealous regulator, the power to declare something "serious" and to establish regulations or permit conditions based on information that is not complete creates its own set of potential problems. And recall the executive order is a directive to all federal agencies about how they are to exercise their decision-making authority.

The geographic area that would be affected by the court's decision could also be expanded by the fact that EPA and the Corps are expected to soon propose a new rule to define what waters are subject to the CWA. The CWA provides that any discharge of dredged or fill material into "navigable waters" requires a permit. The term "navigable waters" is then defined as "waters of the U.S." Recent Supreme Court decisions have attempted to provide guidance on what that term means. It is anticipated that the soon-to-be-issued proposed rule will represent the EPA/Corps interpretation of those Supreme Court decisions. Some observers, who have studied a draft EPA/Corps guidance that will be the foundation for the proposed rule, have voiced concern that the proposed rule will make virtually every area of the U.S. a navigable water, including the deserts of Nevada that experience seasonally heavy rains that leave behind ephemeral ponds or streams. While no one knows what will be proposed or eventually promulgated, to the extent a new regulation expands the geographic reach of the CWA, it necessarily expands the number of projects that will need Section 404 permits and, therefore, the reach of EPA's ability to reverse Corps permits "whenever" EPA believes such an action is justified.

Some members of Congress have expressed a desire to limit the jurisdictional, that is, geographic, reach of the CWA. The proposed jurisdictional rule discussed in the preceding paragraph will surely draw Congressional attention and, perhaps, court challenges. The Mingo Logan decision may also draw Congressional attention. Some observers wonder if EPA should have the power to retroactively overturn Corps permits while others argue we need a safety value if previously unknown impacts become apparent after the permit is issued. Regardless of which side of that debate you fall on, the reality is that there will be a continuing debate about the correct policy.

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