Originally published in V&E Environmental Law Update E-communication, March 28, 2012
In a pointed rebuke, the D.C. District Court ruled that the U.S. Environmental Protection Agency (EPA) lacked the statutory authority to invalidate an already issued § 404 permit retroactively.1 EPA attempted to invalidate a § 404 permit issued by the Army Corps of Engineers (Corps) that authorized the disposal of spoil from Mingo Logan Coal Company, Inc.'s mountain-top coal mine in Logan County, West Virginia into specified valley areas. This decision is noteworthy both for the sweeping assertions of legal authority under § 404 of the Clean Water Act (CWA) proposed by EPA and for the court's animated rejection of those positions.
EPA asserted that, under CWA § 404(c), it could withdraw the specification of certain areas as disposal sites at any time, even after permit issuance, without limitation. EPA further asserted that this withdrawal would preclude discharge of fill into those areas pursuant to the Corps permit . . . but the permit need not be revoked or modified. This was convenient because only the Corps could undertake to revoke or modify the permit, and it declined to do so in this instance. The court found that this was "a stunning power for an agency to arrogate to itself when there is absolutely no mention of it in the statute," and granted summary judgment to Mingo Logan. 2
The court's analysis focused on the text of § 404(c), read in context of the CWA as a whole. Section 404(c) authorizes EPA "to prohibit the specification (including the withdrawal of specification) of any defined area as a disposal site," "whenever" EPA determines that the discharge will have certain "unacceptable" environmental consequences.3 The court observed that while this provision was not a model of drafting clarity, and while it gives EPA authority to veto a specification in the process leading up to issuance of a permit, it "does not go so far as to confer the express authority to undermine an existing permit."4 Reviewing § 404 in light of the statute as a whole, the court held that the "idea that a permit ... will simply evaporate upon EPA's say-so is at odds with the exclusive permitting authority accorded the Corps in § 404(a), and the legal protection Congress declared that a permit would provide in § 404(p) [which states that compliance with a permit "shall be deemed" compliance with key provisions of the CWA]," among other things.5 Further, the limited legislative history supported the argument that EPA had to act before permit issuance and was not granted a post-issuance veto over Corps permits.6
EPA also broadly asserted its power to "withdraw its assent to a disposal site at any time, even if the agency did not exercise its authority to prohibit or deny the specification at the outset."7 At argument, the government further explained that its power to undo already issued permits was not limited to situations where "significant new information, which was not available to the agency when the permit application was reviewed, alters the environmental calculus" despite a "policy statement" to the effect in the preamble to its § 404(c) regulations.8 Applying a "step one" analysis under Chevron U.S.A. Inc. v. Natural Resources Defense Counsel, Inc., 467 U.S. 837 (1984), the court concluded that § 404(c) "does not expressly authorize" EPA to exercise this purported power and, read as a whole, the CWA unambiguously prohibits the agency from doing so.9
In the alternative, the court also considered whether EPA's view was entitled to deference under Chevron "step two." The court observed that the statute's division of authority between EPA and the Corps made it inappropriate to give EPA the full measure of deference Chevron ordinarily affords an agency's interpretation of a statute it administers. Even assuming § 404 to be ambiguous on the relevant question, the court found EPA's interpretation is "illogical and impractical":
In addition, the court found it "unreasonable to sow a lack of certainty into a system that was expressly intended to provide finality."11 EPA's actions in the case were "unprecedented in the history of the Clean Water Act."12 Moreover, even when the interpretation was given the deference due an agency position asserted in litigation, the court found its interpretation to be unreasonable.
This outcome represents a significant victory for the mining industry in particular. EPA has been dealt yet another setback in its effort to fundamentally reconstitute the regulations and procedures for issuing § 404 permits for coal mining in Appalachian states. For instance, in 2008, the Office of Surface Mining (OSM), under the Bush administration, issued the Stream Buffer Zone Rule (SBZ rule), clarifying that the SBZ rule does not prohibit fills in navigable waters as had been held by a district court in West Virginia several years earlier. In 2009, the EPA, under the Obama administration, attempted to rescind the SBZ rule in the context of "defending" a challenge to it by anti-mining groups in the U.S. District Court for the District of Columbia. The court held that the EPA could not simply withdraw the 2008 SBZ rule without following established statutory procedures for repealing an agency rule. Soon thereafter, the EPA adopted the Enhanced Coordination Process for CWA § 404 permits for coal mines in Appalachia, which substantially expanded and protracted the process and time for obtaining these key permits. In January 2011, the court ruled that the EPA did not follow established statutory procedures in developing this "process" and held that the EPA's actions constituted legislative rulemaking in violation of the Administrative Procedure Act's notice and comment requirements.
This decision is also notable because it is a part of a recent spate of EPA defeats in a variety of courtrooms, including the Supreme Court, and the Fifth Circuit Court of Appeals.
Footnotes
1 Mingo Logan Coal Company Inc. v. EPA, No. 10-0541, slip op. at 2 (D.D.C. March 23, 2012).
2 Slip op. at 10.
3 Slip op. at 11.
4 Slip op. at 14.
5 Slip op. at 18.
6 Slip op. at 19-23.
7 Slip op. at 11.
8 Slip op. at 28-30.
9 Slip op. at 15.
10 Slip op. at 31.
11 Slip op. at 31.
12 Slip op. at 1.
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