On Friday, March 23, 2012, the U.S. District Court for the District of Columbia overturned EPA’s retroactive veto of the Mingo Logan Coal Company Spruce No. 1 coal mine.
On January 22, 2007, the Army Corps of Engineers (“Corps”) issued a permit to Mingo Logan pursuant to section 404 of the Clean Water Act (“CWA”), which authorized Mingo Logan to discharge fill material from its Spruce No. 1 mine into nearby streams. Nearly three years later, EPA published its Final Determination purporting to withdraw the specification of two streams as disposal sites and thereby invalidate the 404 permit for those sites. Section 404 of the Clean Water Act is unique in that it gives the Corps of Engineers the authority to issue “fill” permits but also authorizes EPA, under Section 404(c):
to prohibit the specification (including the withdrawal of specification) of any defined area as a disposal site . . . whenever he determines, after notice and opportunity for public hearings, that the discharge of such materials into such area will have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas (including spawning and breeding areas), wildlife, or recreational areas.
Prior to its “veto” of the Spruce permit, EPA had only exercised its 404(c) authority 12 times, and in each of those cases had done so before the Corps finished issuing a 404 permit U.S. District Judge Amy Berman Jackson in Washington, D.C., characterized EPA’s action as unprecedented in the history of the CWA. The Court concluded that the CWA does not give EPA the power to render a 404 permit invalid once it has been issued by the Corps. The Court held that EPA’s view of its authority was inconsistent with clear provisions of the statute.
The Court analyzed the agency’s interpretation of the statute by following the two-step procedure set forth in Chevron, USA, Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). Chevron mandates a potential two-step process for interpreting statutes administered by the government. Under step one, an agency is owed no deference if the statute is clear and unambiguous—the clear language of the statute controls regardless how it is interpreted by thegovernment. If, however, the statutory language is vague or ambiguous, then reviewing courts are to defer to any reasonable construction of the statute by the agency entrusted with its administration. Here, the Court initially determined that when the whole of the Clean Water Act is considered, Section 404 clearly requires under Chevron “step one” that EPA exercise its so-called “veto” authority before the Corps finally issues a permit. The Court observed that the language of the statute does not authorize EPA to withdraw a permit, but only to prohibit or withdraw “specification” of a disposal area, a step which the Court determined precedes the issuance of a permit by the Corps.
Despite ruling that EPA’s interpretation fail the first step of Chevron, the Court determined that if there was any ambiguity to the language that EPA’s position also failed under step two of the Chevron analysis. Here, the Court’s analysis was complicated by the fact that the Clean Water Act provides authority to both the Corps and EPA, and in such a case there is an argument that EPA is owed no deference as a result. However, the Judge ruled that even according EPA some deference, EPA’s interpretation of its authority to allow it to exercise its 404(c) authority after the Corps had issued a permit was unreasonable. The Court used a variety of strong language in discussing EPA’s interpretation, characterizing it as illogical and impractical, along with stating that EPA had resorted to magical thinking.
Of note, the Court pointed to the various amici briefs filed expressing concern with eliminating finality from the permitting process as additional grounds for finding EPA’s interpretation to be unreasonable. It thus relied on the primary argument made by industry—certainty of a permit is a foundation of the permitting process. The Court’s opinion is also notable for its strong language in places, making such statements as: EPA’s “reading does not exactly leap off the page” and “[t]his is a stunning power for an agency to arrogate to itself to itself when there is absolutely no mention of it in the statute.”
This article was authored by Matthew S. Tyree, Jackson Kelly PLLC. For more information on the author see here.