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AGC Challenges EPA’s Authority to Revoke Previously Issued, Valid Section 404 Permit

September 19, 2012

Coalition Files Amicus Brief Today in a Federal Appeals Court AGC and a coalition of industry groups file a friend-of-the-court brief today in a federal appeals court arguing that the U.S. Environmental Protection Agency (EPA) exceeded its authority under the Clean Water Act (CWA) when it revoked a Section 404 dredge-and-fill discharge permit duly issued by the U.S. Army Corps of Engineers (Corps).  If EPA is allowed to revoke this permit, every valid Section 404 permit held by any entity — construction companies, public works agencies and individual citizens — would be stuck in regulatory limbo and potentially subject to the same unilateral, after-the-fact revocation. AGC’s brief lays out the staggering economic, policy and legal implications that would follow such an unprecedented action. The case—now on appeal in the U.S. Court of Appeals for the D.C. Circuit—involves the disposal of rock waste from a mountaintop coal mine in West Virginia and marks the first time that EPA has ever vetoed a valid CWA Section 404 permit after the permit has already been issued. Earlier this year, the lower court ruled that EPA has no authority under the Clean Water Act to veto a dredge-and-fill permit after the Corps has issued the permit (Mingo Logan Coal Co. v. EPA, D.D.C., No. 1:10-cv-541, 3/23/12).  EPA had argued that CWA Section 404(c) gives the Agency authority to invalidate a Section 404 permit whenever EPA concludes that an activity would have “unacceptable” environmental consequences.   The district court blocked EPA's action to revoke the previously issued permit, as requested by Mingo Logan Coal Company, Inc. (Mingo Logan).  EPA appealed that decision.  AGC has joined a coalition of industry groups in filing an amicus brief in the D.C. Circuit in support of the district court decision. EPA’s after-the-fact veto has caused concern and anxiety for members of the business community because it threatens the finality of their wetland and stream permits.  Entities requiring permits for private real estate development, transportation and other critical infrastructure projects could find that, even when they are in full compliance, their permits do not provide them certainty.  Eliminating finality from the Section 404 permit process would have a significant economic impact on AGC members because lenders and investors would be less willing to extend credit and capital if every construction project involving jurisdictional waters could be “subject to an open-ended risk of cancellation.”  Billions of dollars in economic activity could be adversely affected if EPA's unprecedented grab for veto authority goes unchecked.

AGC’s Brief

AGC’s brief stresses that “EPA has injected a new and untenable level of uncertainty into the investment planning process for the thousands of project proponents requiring Section 404 permits.”  It goes on to explain how “EPA’s unprecedented move to invalidate the permit at issue in this case will require dramatic adjustments to the cost-benefit analysis for future permit applicants.” “Investments that require a Section 404 permit frequently are the type of projects that spur other investment, or offer benefits to consumers and the public… public sector activities, such as the construction of libraries and schools and infrastructure projects, that reduce costs throughout the economy and contribute to our overall quality of life,” AGC’s brief states.  The district court rightly recognized, as further explained in AGC’s brief, if EPA can at any time unilaterally modify or vacate Section 404 permits issued by the Corps of Engineers, it will put project proponents in an “untenable position,” and “will call into serious question the reliability of a permitting scheme that underlies hundreds of billions of dollars worth of U.S. investments.”

Legal Background

Culminating a 10-year permitting process, in which EPA participated fully, the Army Corps issued Mingo Logan Coal Company a Section 404 permit for the Spruce No. 1 mountaintop coal mine in West Virginia, authorizing Mingo Logan to discharge fill material (rock and dirt) from a surface coal mining project into nearby streams.  The permit would have enabled the Mingo Logan to expand a surface coal mine located in Appalachia. Years after the Corps issued the Section 404 permit, EPA requested that the Corps suspend, modify or revoke the permit because EPA claimed that new information had arisen or that the Corps had failed to fully consider certain issues that had been raised during the permitting process. The Corps rejected EPA’s request, finding no grounds to suspend, modify or revoke the permit. Over a year later, EPA issued a “Final Determination” withdrawing roughly 88 percent of the total discharge area authorized by the permit and effectively blocking large-scale operations at the site.  Mingo Logan asked the U.S. District Court for the District of Columbia to declare that EPA lacks the authority to modify or revoke Mingo Logan’s Section 404 permit, that its attempt to modify the permit was unlawful and that the permit remains valid and operative. The district court held that EPA exceeded its authority under the Clean Water Act when it “vetoed” a permit after it had been issued by the Corps. The court concluded that the CWA does not give EPA the power to render a permit invalid once it has been issued by the Corps.  The court found that that “[n]either the statute nor [a related] Memorandum of Agreement between the EPA and the Corps [made] any provision for a post-permit veto . . . .”  EPA appealed that decision to the U.S. Court of Appeals for the D.C. Circuit.  AGC has joined a coalition of industry groups in filing an amicus brief in the D.C. Circuit in support of the district court decision.  The court has yet to set the date for the oral argument.

Section 404 Permitting

The CWA prohibits the discharge of a pollutant by any person, except in compliance with specified statutory requirements. Under CWA Section 404, the Corps has authority to issue permits for the discharge of dredged or fill material to waters of the United States. The Corps must choose the disposal site through application of EPA “guidelines,” but EPA has the final authority to prohibit a disposal site. CWA Section 404(c) grants EPA the power to veto or restrict a CWA Section 404 permit if the discharge would have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishing areas, wildlife, or recreational areas. Courts have consistently given substantial deference to EPA when its CWA Section 404(c) vetoes have been challenged. However, prior to the Mingo Logan case, no court had been called upon to determine whether EPA had authority to veto a disposal site after-the-fact of the Corps issuing a permit.

For more information, please contact Leah Pilconis, Senior Environmental Advisor to AGC, at pilconisl@agc.org.

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