Federal Court Opens Door for Endless EPA Veto Power over Corps Permits

In a controversial ruling on April 23, 2013, the U.S. Court of Appeals for the D.C. Circuit reversed a D.C. District Court ruling [1] and held that the Environmental Protection Agency ("EPA") has virtually unlimited veto power over specifications found in dredge-and-fill permits issued by the U.S. Army Corps of Engineers ("Corps").  While the case, Mingo Logan Coal Co. v. U.S. Environmental Protection Agency , [2] is concerned with a particular mountaintop mining permit, the Court's decision could have far-reaching consequences that stretch well beyond the mining industry to any permittee under section 404 of the Clean Water Act.

Mingo Logan Coal Company ("Mingo Logan"), a subsidiary of Arch Coal, Inc., was issued a dredge-and-fill permit by the Corps on January 22, 2007, for its Spruce No. 1 mountaintop mine in Logan County, West Virginia.  The permit authorized the discharge of dredged or fill material into three different streams and their tributaries.  Prior to the permit's issuance, EPA expressed concerns about the environmental impacts of mountaintop mining but chose not to object to any of the permit's provisions.

Over two years later, EPA asked the Corps to revoke the permit, but the Corps refused.  EPA responded by claiming it would use its authority under Section 404(c) of the Clean Water Act [3] ("CWA") to prohibit the use of the streams as permitted disposal sites.  After satisfying the necessary public notice requirements, EPA published a final determination on January 11, 2013, almost 4 years after the permit was originally issued, asserting its authority to withdraw from the permit the prior approval of two of the streams (and their tributaries) as disposal sites for dredge or fill materials.

Mingo Logan filed a challenge with the D.C. District Court, which held that EPA had exceeded its authority under Section 404(c) of the CWA by attempting to retroactively veto disposal sites that were already authorized by a Corps-issued permit. [4] EPA then appealed to the U.S. Court of Appeals for the D.C. Circuit.

Writing for the Court of Appeals, Judge Karen Henderson largely focused the opinion on what the Court viewed as "unambiguous language" found in Section 404(c) of the CWA.  Under Section 404(c), the EPA Administrator is granted authority to "prohibit the specification (including the withdrawal of specification) of any defined area as a disposal site whenever he determines" that such discharges will have unacceptable adverse effects.  The Court held that the term "whenever" gives EPA never-ending veto power that it can use even after the Corps has issued a permit.  The Court also found the term "withdrawal" supported this view as it reasoned EPA could only "withdraw" a specification after it was included in an already-issued permit.

Mingo Logan argued that Congress intended for the Corps, and not EPA, to function as the permit issuing authority.  Mingo Logan also pointed to the apparent conflict when the Court's interpretation of Section 404(c) is viewed in conjunction with the remaining provisions of Section 404, which clearly designate the Corps as the permitting authority to issue dredge-and-fill permits and which specify that final permits authorizing disposal sites are meant to provide permittees with security and certainty as they move forward with their projects.  Additionally, from a more practical standpoint, Mingo Logan argued that the "extensive coordination process" between EPA and the Corps, during which disposal sites are proposed and reviewed before being included in the final permit, gives EPA more than ample opportunity to veto any disposal sites.

The Court, however, did not see any of these arguments as a sufficient reason for ignoring what it perceived to be the "plain language" of the CWA.  Instead, it chose to give EPA boundless veto power that permittees will now need to be wary of during the entire lifespan of their permits and projects.

Retroactive vetoes may only be the beginning of EPA's attempt to assert unlimited power over Corps permits.  A report released by EPA on April 26, 2013 has many worried that EPA will not only attempt to retroactively veto permits in the future but will also take actions to preemptively veto potential Corps permits before the permitting process has even begun.  The report concerns the Bristol Bay region of southwest Alaska, and it concludes that a large mining operation there would cause significant damage to streams and wetlands and disrupt the large salmon population in the area.  Hard rock mining companies that have been planning a potential project at the site for over 10 years have criticized the report and called for EPA to let its project go through the normal permitting process.  However, obtaining any mining permit for the area following the report's release is likely to be an uphill battle.  The report is widely viewed as an indication that EPA will veto any Corps permit for the proposed project, amounting to a preemptive veto of a permit for which no application has yet been submitted.

The Mingo Logan decision, unless reversed by means of an en banc review by the D.C. Circuit, or review by the Supreme Court, poses a major economic risk to any Corps permittee, not just the mining industry.  Any entity regulated by the government wants a high degree of certainty that once all governmental approvals are obtained for a project, the entity can construct and operate the permitted project without undue interference from the government. Under Mingo Logan, projects could be rendered nonoperational by EPA long after Corps approval is granted, subject only to takings claims under the 5th Amendment.  The West Virginia Congressional delegation has introduced two bills, H.R. 524 and S. 830, that would prohibit EPA from utilizing its veto power once the Corps has issued a permit.  If the judiciary does not reverse the decision, it will fall to Congress to restore some level of certainty to the 404 permitting process.

For any questions related to the 404 permitting process or any Corps permitting issues, please contact Robert Andersen (202.772.0924 or randersen@clarkhill.com ), Kenneth von Schaumburg (202.772.0904 or kvonschaumburg@clarkhill.com ), John Sheehan (202.572.8665 or jsheehan@clarkhill.com ), Christopher Clare (202.572.8671 or cclare@clarkhill.com ), or your Environmental, Energy and Natural Resources attorney at Clark Hill.