EPA says it had a well-established authority to veto Arch Coal permit

The U.S. Environmental Protection Agency said that it has consistently maintained authority to veto Section 404 Clean Water Act permits, and so was within its authority to veto in January 2011 a Section 404 permit that the U.S. Army Corps of Engineers had issued to a unit of Arch Coal (NYSE: ACI) for the 2,278-acre Spruce No. 1 strip mine in Logan County, W.Va.

EPA on July 18 filed an initial brief at the U.S. Court of Appeals for the D.C. Circuit as part of its appeal of a March 23 ruling out of the U.S. District Court for the District of Columbia. In that lower court ruling, Judge Amy Berman Jackson granted Mingo Logan Coal’s motion for summary judgment, denied EPA’s cross-motion for summary judgment, and vacated the permit veto. Jackson ruled that EPA overstepped its authority. Incidentally, Mingo Logan’s opening brief at the appeals court is due to be filed Sept. 4.

The EPA has also gotten very active under the Obama Administration in pushing for tougher Section 404 permits before they are issued. The coal industry fears that if EPA can now veto issued permits it doesn’t like, that will create further uncertainty and permit delays, putting a big crimp into coal production, particularly in Central Appalachia, where the most controversial permits tend to be issued. 

“This case presents a question of statutory construction that is an issue of first impression for this Court,” said the EPA brief. “Section 404(c) of the Clean Water Act authorizes EPA to ‘withdraw’ the Corps’ ‘specification’ of navigable waters as disposal sites for fill material ‘whenever’ EPA determines that disposal into those sites will have an ‘unacceptable adverse effect’ on wildlife. Acting on that authority, EPA withdrew specification of certain West Virginia streams as disposal sites for overburden from Mingo Logan’s surface coal mine after the agency concluded that filling those streams would have an unacceptable adverse effect on wildlife.”

Mingo Logan sued, alleging that EPA could not withdraw specification of those sites because they were already in an issued Section 404 permit. Mingo Logan also argued that EPA’s action should be set aside as arbitrary and capricious. “The district court vacated EPA’s decision after concluding, at Chevron step two, that EPA cannot act under § 404(c) after the Corps issues a § 404(a) permit, even if EPA receives relevant new information after the permit issues,” EPA noted.

EPA says rules dating back to 1979 give it veto authority

But, the agency said that in 1979 it promulgated regulations governing the exercise of its § 404(c) authority. Those regulations have never been amended. The regulations apply to “all existing, proposed or potential disposal sites” for discharges of fill material. EPA said that under those regulations it may withdraw specification of “any area already specified” by the Corps or an approved state. EPA must notify the public and the “permit holder” of any proposed determination. The public can comment on the proposed determination, and EPA must hold a public hearing at the permit holder’s request. Upon making a final determination to withdraw specification of a disposal site, EPA must inform the permit holder and publish notice of the § 404(c) determination in the Federal Register.

EPA’s regulations also establish an emergency procedure used where a permit has already been issued, and the EPA Administrator has reason to believe that a discharge under the permit presents an imminent danger of irreparable harm requiring action by EPA to protect “the public health, interest, or safety.” In those circumstances, EPA asks the Corps to suspend the permit while EPA considers withdrawing specification of disposal sites authorized by the permit. If necessary, EPA can sue to enjoin any discharge of fill that would cause “an imminent and substantial endangerment” to the public health or welfare.

The preamble to EPA’s 1979 regulations explained why the agency interpreted § 404(c) to authorize withdrawal of specifications after a permit issues. Over the objections of commenters, EPA reasoned that Congress used the term “withdrawal” to indicate that EPA can act after a permit issues. The regulatory preamble stressed that “where possible it is much preferable to exercise this authority before the Corps or state has issued a permit, and before the permit holder has begun operations.” EPA said it recognized, however, that post-permit withdrawal of specifications might be necessary in unusual circumstances, such as where “new information” emerged or “scientific discoveries” occurred after a permit issued. EPA also clarified in the regulatory preamble that a § 404(c) withdrawal cannot render unlawful past discharges authorized under a valid permit.

“In sum, both the § 404(c) regulations and the preamble to those regulations clearly articulated EPA’s construction of the statute,” said the EPA brief. “Thus, since at least 1979, EPA has interpreted § 404(c) to authorize the agency to withhold or withdraw specification of a disposal site ‘before a permit is applied for, while an application is pending, or after a permit has been issued.’”

EPA said it vetoed permits twice before in non-coal cases

EPA said it exercised its post-permit § 404(c) authority on two occasions before it acted in this case. The first was in 1981, after the Corps had issued a § 404(a) permit to the City of North Miami, Florida, to fill wetlands to develop a recreational facility. EPA exercised its post-permit § 404(c) authority again in 1992. In that case, EPA initially made a § 404(c) determination before a permit issued. But a district court set aside EPA’s § 404(c) action as arbitrary and capricious and ordered the Corps to issue a § 404(a) permit for the relevant disposal sites in James City County, Va. On remand from the Fourth Circuit, EPA issued another § 404(c) determination that withdrew specification of disposal sites authorized by the Corps permit. The Fourth Circuit upheld EPA’s post-permit action in that case.

“Apart from its regulations and post-permit final determinations, EPA has repeatedly asserted that it can withdraw specification of disposal sites authorized under a § 404(a) permit,” the agency said. “In 1980, EPA issued the 404(b)(1) Guidelines, the regulations that provide criteria for the Corps and approved States to evaluate permit applications. In the preamble to those regulations, EPA reiterated that § 404(c) authorizes post-permit withdrawal of specification ‘in unusual circumstances.’ And in 1992, EPA and the Corps issued a 404(q) Memorandum to promote coordination under § 404. That memorandum expressly allows the Corps to issue a permit while EPA considers whether to act under § 404(c).”

In 2007, the Corps issued Mingo Logan a permit to discharge fill material into waters of the United States from operations associated with the Spruce No. 1 coal mine in West Virginia. The Spruce No. 1 mine is one of Appalachia’s largest individual surface mines, EPA noted. Mingo Logan’s mining project would disturb roughly 3.5 square miles of earth by removing more than 400 feet from the top of a mountain and placing nearly 3 billion cubic feet of overburden into six adjacent valleys. A portion of that overburden would fill more than 7 miles of mountain streams subject to the Clean Water Act, including Seng Camp Creek, Pigeonroost Branch, and Oldhouse Branch, and their tributaries.

Before the Corps issued the Spruce permit, EPA said it had expressed several concerns about the environmental impact of Mingo Logan’s project. But the agency said it chose not to exercise its discretionary § 404(c) authority at that time in light of the information available. Notable is a fact that EPA didn’t bring up, which is that at the time it was under the orders of the George W. Bush Administration, which tended to be pretty friendly to industry.

A week after the Spruce permit was issued, environmental groups challenged it as part of litigation against the Corps in the U.S. District Court for the Southern District of West Virginia. That litigation is ongoing. The environmental groups entered into an agreement with Mingo Logan whereby the company has limited discharge of fill to two of the six disposal sites specified in the Spruce permit. Pigeonroost Branch, Oldhouse Branch, and their tributaries lie in the remaining four sites and have not been disturbed, nor will they be disturbed before this court decides this appeal.

In 2009, under the Obama Administration, EPA asked the Corps to reconsider the Spruce permit under the 404(b)(1) Guidelines because of “new information and circumstances.” Based on its own analysis of that new information, EPA recommended that the Corps use its authority to modify, suspend, or revoke the Spruce permit. The Corps District Engineer replied that “no factors…currently compel me to consider permit suspension, modification or revocation.”

EPA then initiated proceedings under § 404(c) to withdraw specification of certain disposal sites specified in the Spruce permit because the agency believed that discharging fill into those sites could have an unacceptable adverse effect on wildlife. The agency said it received more than 50,000 written comments during the revocation process, including a comment from the U.S. Fish and Wildlife Service agreeing that the activities authorized by the Spruce permit “would result in unacceptable adverse impacts to aquatic communities and other wildlife.”

Some mining is still allowed in limited mine areas

In 2011, EPA issued a final determination withdrawing specification of Pigeonroost Branch, Oldhouse Branch, and their tributaries as fill disposal sites. The Final Determination also prevented specification of those waters “for use as a disposal site associated with future surface coal mining that would be expected to result in a nature and scale of adverse chemical, physical, and biological effects similar to the Spruce No. 1 mine.”

Arch Coal has had a contractor, Eagle Creek Mining LLC controlled by John and Thomas Potter, working the limited areas of Spruce No. 1 that is allowed under the court mandates. U.S. Mine Safety and Health Administration data shows the mine produced 177,056 tons in the first quarter of this year and 819,831 tons in all of 2011.

The West Virginia Department of Environmental Protection website shows the mine as “active, moving coal,” and that as of a June 28 site inspection, only 329 acres of the permitted 2,278 acres had been disturbed by mining activity.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.