On Tuesday, July 31, 2012, the U.S. District Court for the District of Columbia1 ruled that the U.S. Environmental Protection Agency (EPA) overstepped its statutory authority under the Clean Water Act (CWA) and the Surface Mining Control and Reclamation Act (SMCRA), and infringed on the authority reserved to state regulators under those statutes when it issued a "guidance" memorandum on Sections 402 and 404 permitting decisions in Appalachia. This decision is noteworthy for the court's explicit rejection of EPA's attempt to expand its legal authority under the CWA as part of an effort to curb mountaintop mining in Appalachia.

In April 2010, the EPA released its "interim" guidance memorandum (later finalized in July 2011), which addressed its Appalachian Regional offices' involvement in Sections 402 and 404 permitting decisions in Appalachia. The guidance applied to only six states, and most notably contained EPA's "recommendation" that state permitting authorities rely on EPA's conductivity benchmarks in their analysis of a discharge's "reasonable potential" to degrade water quality and that the "reasonable potential" analysis occur before issuance of the permit.2

The National Mining Association and others challenged the EPA's guidance arguing that EPA's guidance document exceeded the agency's authority under the CWA by effectively establishing a region-wide water quality standard based on conductivity levels that EPA associated with adverse impacts to water quality (thereby usurping authority that the statute delegated to the states) and effectively forcing various permitting authorities to include the conductivity level in pending permits (again, displacing a state function).3

The EPA sought to avoid scrutiny by asserting that the Final Guidance was not "final agency action" for purposes of judicial review under the Administrative Procedure Act, that the claims were unripe and the plaintiffs lacked standing, and argued on the merits that the guidance was consistent with statutory and regulatory authority. The court disagreed with the EPA on all fronts, holding first that the "Final Guidance constitutes final agency action because it is both the consummation of the EPA's decision making process, and . . . has been applied by the regional field offices in their review of draft permits . . . changing the obligations of the state permitting authorities."4

The court also rejected EPA's arguments on the merits. The court first concluded EPA was attempting to assert authority Congress had assigned to other federal officials. The court explained that EPA:

has a very limited role in the issuance of CWA permits and has only the authority to develop . . . guidelines with the [U.S. Army] Corps [of Engineers] (while it is the Corps, as the permitting authority, that actually determines compliance with the guidelines). It is thus beyond the EPA's purview to declare that "[p]rojects should fully evaluate and, where appropriate and practicable, incorporate the following general aspects of effective impact minimization" or to attempt to specify to the Office of Surface Mining or the State SMCRA agency what constitutes an "appropriate" best management practice.5

The court also concluded that "the Final Guidance impermissibly sets a conductivity criterion for water quality," thereby overstepping EPA's authority under Section 303 of the CWA.6 Finally, even while recognizing the strong deference typically accorded to an agency's interpretation of its own rules (and despite acknowledging the regulation was at least partially silent on the question), the court concluded EPA had violated the plain terms of its own regulations by attempting to insist, through guidance rather than by amending its rules, that states undertake "reasonable potential" analyses prior to issuing a permit, rather than leaving timing to the discretion of the state permitting authorities.7

The case reflects a sharp rebuke that EPA may not avoid judicial review by couching its policies as "guidance" rather than formal rules, and may not sidestep the divisions of authority between the federal government and states reflected in the permitting programs' statutes and regulations. EPA may choose to appeal the court's decision or simply continue objecting to draft permits on a case-by-case basis, perpetuating confusion about the future of water permitting for coal mining in Appalachia. Nonetheless, the court's decision represents a significant victory for the mining industry — and yet another setback for EPA's efforts to reconstitute the regulations and procedures for issuing water permits for coal mining in Appalachia.8

Footnotes

1 National Mining Ass'n v. Jackson, No. 10-1220, 2012 WL 3090245 (D.D.C. July 31, 2012).

2 Conductivity is a measure of the ability of water to pass an electrical current, and is largely affected by the presence of inorganic dissolved solids that form positively or negatively charged ions. Conductivity is also influenced by the geology of any specific area. See http://water.epa.gov/type/rsl/monitoring/vms59.cfm.

3 Id. at *3.

4 Id. at *8.

5 Id. at *12.

6 Id. at *14.

7 Id. at *17.

8 For instance, last year, the same district court sided with the National Mining Association in challenging an agreement between EPA and the U.S. Army Corps of Engineers to an Enhanced Coordination Process for CWA § 404 permits for coal mines in Appalachia. That agreement had substantially expanded and protracted the process for obtaining these key permits. And in March 2012, another federal judge upheld water pollution permits that the EPA had attempted to revoke for one of West Virginia's largest mountaintop removal coal mines, the 2,300-acre Spruce No. 1 mine in Logan County.

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