In a recent appellate court decision that is sure to create a great deal of uncertainty and hamper development efforts, the Court of Appeal for the D.C. Circuit approved EPA’s authority to veto permits issued by Army Corps of Engineers (Corps) well after they are issued. In fact, based on this ruling, these may do this ‘whenever’ they want. Mingo Logan Coal Company, Inc. v. EPA, No. 12-5150, April 23, 2013.
The Clean Water Act (CWA), Section 404(a), authorizes the Corps to issue permits for the discharge of fill material into waters of the United States at specified disposal sites. This authority, however, is subject to the CWA Section 404(c), which provides authority to EPA’s Administrator “to prohibit the specification (including the withdrawal of specification) of any” 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.” It is the timing of EPA’s actions (‘whenever he determines’) that will create problems.
Mingo Logan Coal is a coal mining company that operates a mountaintop mine, the Spruce No. 1 Mine, in West Virginia. In 1999, it applied to the Corps for a permit under CWA Section 404 to discharge or place fill material at four disposal sites. During the permitting process, EPA prepared a Draft Environmental Impact Statement indicating that even with the best practices, mountaintop mines cause significant and unavoidable environmental impacts. Importantly, however, EPA did not submit an objection to the issuance of the permit under Section 404(c). In 2007, the Corps issued the permit, effective until 2031.
In 2009, EPA suggested that the Corps use its discretionary authority to suspend, revoke, or modify the permit based on new information about the projects potential to degrade downstream water quality. The Corps declined, prompting EPA to issue a proposed determination to withdraw authority and/or restrict use of the disposal sites to receive fill material from the Spruce No. 1 Mine. After the required notice and comment period, the EPA issued a final determination, which formally withdrew authority for Mingo Logan to use the named disposal sites, stating that the “disposal site[s] associated with future surface coal mining … would be expected to result in a nature and scale of adverse chemical, physical, and biological effects similar to the Spruce No. 1 mine.” Mingo Logan, p. 5, citing 76 Fed. Reg. 3126, 3128 (Jan. 19, 2011).
EPA did not object during the permit process. Instead, four years after the permit was issued, it “withdrew” authorization for the placement of fill material at the specified disposal sites. The D.C. Circuit allowed this result based on its reading of Section 404(c), which “imposes no temporal limit on the [EPA’s] authority to withdraw” approval for the disposal sites. Mingo Logan, p. 9. In other words, ‘whenever’ means just that and the EPA is free “at any time” to withdraw authority. Mingo Logan, p. 9.
Obviously, this result creates uncertainty for any permit recipient seeking to operate under a permit issued by the Corps. Under this decision, a permittee simply has no assurance that EPA will not decide to withdraw authority, even well after the permit is issued. A permittee could expend vast resources to obtain a permit and be on the verge of project initiation, or even well into the project, only to have EPA veto the project at the last minute. EPA’s review during the permit process essentially becomes worthless and unreliable.
Although Mingo Logan is seeking a review of this decision by the U.S. Supreme Court, an individual permittee should seek to protect itself in the interim. First, during EPA’s review during the permit process, a permittee should make sure EPA has all available information about the disposal sites and possible adverse impacts. Recall that EPA claimed in Mingo Logan that new information had become available; if EPA acts after the permit is issued based on information available to it prior to the issuance, the result may be different. Second, ensure contracts for any work necessary to perform the project include a clause that the contract is voidable should the authority provided by the permit be withdrawn. Finally, act promptly to begin and finish the permitted project.