Arch’s Mingo Logan Coal argues that EPA overreached on permit

Congress gave the U.S. Army Corps of Engineers exclusive authority over Section 404 permits and the U.S. Environmental Protection Agency overstepped its authority when it in January 2011 vetoed an issued permit, said the Mingo Logan Coal unit of Arch Coal (NYSE: ACI).

Mingo Logan on Sept. 4 filed its opening brief at the U.S. Court of Appeals for the D.C. Circuit in an EPA appeal of a March ruling from a District Court judge that said the agency did indeed exceed its authority in vetoing a Section 404 permit for the 2,278-acre Spruce No. 1 strip mine in Logan County, W.Va.

Section 404(c) of the Clean Water Act gives EPA no power to modify, suspend or revoke “permits,” the company said. Did EPA exceed its authority under Section 404(c) by purporting to substantially modify, more than four years after its issuance, Mingo Logan’s Corps-issued Section 404 permit for the Spruce mine, said Mingo Logan about the base issued in this case.

The ruling under review at the appeals court was issued by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia on March 23.

In January 2007, after ten years of study, the Corps granted Mingo Logan a Section 404 that authorized the discharge of dredged or fill material into parts of Pigeonroost Branch, Oldhouse Branch and Seng Camp Creek at the Spruce No. 1 coal mine. During those ten years, dozens of state and federal regulators—including EPA—exercised authorities carefully prescribed in numerous environmental laws, Mingo Logan pointed out. “EPA could have objected at various points, and even could have prohibited the use of the disposal sites the Corps had specified, thereby blocking the Permit,” the company added in its 175-page filing. “But EPA did not do so. So the Corps issued the Permit, and Mingo Logan has operated in compliance with the Permit ever since.”

Yet more than four years after the Corps issued the permit, EPA—in an unprecedented action—attempted to modify the central terms of the permit by eliminating the authority to discharge fill into Pigeonroost and Oldhouse Branches—reducing by nearly 88% Mingo Logan’s operations at Spruce No. 1. “EPA attempted this action even though it acknowledged that Mingo Logan was in compliance with the Permit and even though the Corps had concluded that modification of the Permit was not justified under applicable regulations.”

The company added: “Congress gave the Corps, not EPA, final authority to issue, oversee and enforce section 404 permits. While EPA plays an important role in the formulation of those permits, that role ends once a permit issues. Allowing EPA perpetual and unrestricted license to modify a permit after its issuance—even when the agency authorized to modify the permit has concluded there are no grounds to justify doing so—would destroy the certainty that the permit is intended to provide and upset Congress’s allocation of regulatory authority among the Corps, the States and EPA. Congress did not give EPA such unbridled power.”

Judge Jackson concluded – based on the text of section 404(c), the language and structure of the statute as a whole, and the legislative history – that Section 404(c) does not authorize EPA to revoke or modify a Corps-issued permit. And to the extent the statute could be deemed ambiguous, the court concluded that, even according some measure of deference, EPA’s interpretation of section 404(c) was unreasonable, Mingo Logan wrote.

“On appeal, EPA repackages many of the arguments the district court considered and rejected,” the company added. “EPA advances an untenable textual argument that ignores Congress’s choice of words in section 404(c) and creates conflict with other provisions in the Act. EPA downplays the legislative history that shows Congress’s expectation that EPA would act under section 404(c), if at all, in the pre-permit period. But EPA identifies nothing in the legislative history supporting its interpretation.”

EPA is also making new arguments and asks the appeals court to consider issues the District Court did not reach, the company said. For example, for the first time, EPA argues that the Fourth Circuit appeals court “held” that EPA could veto an issued Section 404 permit. “The Fourth Circuit held no such thing,” the company added. “The cited decision did not even discuss the temporal limit of EPA’s section 404(c) authority. EPA has exceeded its statutory authority. The district court’s judgment should be affirmed.”

EPA says it had authority, and precedent, on its side

EPA said that it has consistently maintained authority to veto Section 404 Clean Water Act permits, and so was within its authority to veto the Mingo Logan permit. EPA on July 18 filed its initial brief.

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.”

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’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.

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

Some mining 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. This 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 360,328 tons in the first half 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.