West Virginia argues against EPA veto authority for coal permits

The U.S. Environmental Protection Agency’s “novel and improper” veto of a permit issued by the U.S. Army Corps of Engineers to a unit of Arch Coal (NYSE: ACI) is an improper abuse of power, said West Virginia Department of Environmental Protection Secretary Randy Huffman.

The DEP on Sept. 19 filed an amicus brief at the U.S. Court of Appeals for the D.C. Circuit. The brief was filed in EPA’s appeal of a District Court ruling from earlier this year that struck down the EPA’s January 2011 veto of a Section 404 Clean Water Act permit for the Spruce No. 1 mine. This 2,278-acre mine, located in Logan County, W.Va., is permitted under Arch Coal’s Mingo Logan Coal unit.

Ruling in favor of Mingo Logan on March 23, U.S. District Judge Amy Berman Jackson concluded that the EPA did not have the authority to invalidate an existing permit, and that the EPA had exceeded its authority under the Clean Water Act.

The DEP issued a mine permit for this project under the federal Surface Mining Control and Reclamation Act (SMCRA) and is also responsible for other Clean Water Act permitting under Section 402. The Corps issues Section 404 permits, with advice from EPA, but EPA has under the Obama Administration become more aggressive in the Section 404 permitting process, with the Spruce No. 1 veto the single most obvious example.

In January 2007, the Corps issued the Spruce No. 1 Section 404 permit after years of review and litigation that started in the late 1990s after the filing of an environmental group lawsuit over this mine. “The Spruce permit is the most studied and scrutinized surface mining  operation in West Virginia’s long history of coal mining,” Huffman wrote in the brief. “In the fourteen years that the State has exercised its regulatory authority over Spruce, the State —working with EPA and the Corps —issued Mingo Logan multiple, interrelated permits and permit modifications under the CWA and SMCRA. These permits and regulatory actions represent the State’s well-reasoned certification that Mingo Logan’s operations at Spruce comply with the State’s water quality standards and mining regulatory requirements.”

Two principal legal and practical concerns prompted the state amicus brief in this case, Huffman noted.

  • “First, EPA’s novel and improper invocation of Section 404(c) of the CWA to ‘withdraw’ the specification of disposal sites for Spruce attempts to arrogate unto EPA authority which rightfully belongs to the Corps. This eleventh-hour action, more than four years after the Corps issued the permit, dramatically expands EPA’s role in the mining regulatory process, designed to be one of cooperative federalism carefully shared between different federal agencies and state regulatory partners.”
  • “Second, from the State’s broader perspective, EPA’s purported ‘veto’ is but one example of its recent efforts to undermine the State’s role as the primary protector of its waters under the CWA and as the primary regulator of mining under SMCRA. The veto willfully ignores the State’s (and the EPA’s) prior resolution of the same issues upon which EPA now bases its ‘veto.’ EPA based its extraordinary usurpation in large part on its new de facto water quality standard for specific conductance, or conductivity. The State, however, issued permits for Spruce based on its own water quality standards, which do not include either a numeric or narrative standard for specific conductance. The State challenged the ‘Final Guidance’ document on which EPA had relied to attempt to set a region-wide water quality standard for conductivity, resulting in a decision by the U.S. District Court for the District of Columbia during the pendency of this appeal that EPA overstepped its own statutory authority and infringed on that of the state regulatory authorities.”

The District Court correctly determined that EPA exceeded its statutory authority by attempting to invalidate the Spruce No. 1 permit, Huffman added. “EPA needs to play by the rules and follow the law,” he wrote. “Accordingly, the State respectfully asks this Court to affirm the district court’s decision vacating EPA’s Section 404(c) action and granting Mingo Logan’s motion for summary judgment.”

Coal landholder United Co. says this veto would cost it millions

Also filing a Sept. 19 amicus brief was United Co., which owns much of the underlying coal reserve at Spruce No. 1 and leases those reserves to Arch. “If the EPA’s revocation is upheld, it will cause most mining operations previously authorized under the permit to grind to a halt, resulting in incalculable losses to United Co., which most conservatively are estimated at this point in time to be in the hundreds of millions of dollars range,” the company said.

United Co. argued that because well-established background principles do not authorize the EPA’s actions, the EPA’s interpretation of Section 404 raises serious constitutional questions and therefore should be rejected by the appeals court.

Another Sept. 19 amicus brief shows how this issue of the extent of EPA authority over Section 404 permitting extends beyond the coal industry. The National Mining Association, which represents coal companies, signed onto the brief. Also backing the brief were the U.S. Chamber of Commerce, the National Association of Manufacturers, the American Road and Transportation Builders, the Association of American Railroads, the National Association of Home Builders, the American Farm Bureau Federation, the National Council of Coal Lessors, Associated General Contractors of America and the National Stone, Sand and Gravel Association.

Under Section 404, the Corps permits thousands of projects each year for activities ranging from construction and transportation to agriculture and manufacturing. The regulatory process for obtaining a Section 404 permit from the Corps is detailed and well established, the brief noted. This regulatory certainty enables investors to reasonably account for permitting costs when deciding whether it makes sense to move forward with a project.

“An adverse ruling in this case would change all of that,” the business groups said. “The U.S. Environmental Protection Agency (‘EPA’) has for the first time ever exercised what it claims is its plenary authority to invalidate—at any time—an existing Section 404 permit by withdrawing the underlying specification of a disposal site. In so doing, 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. Effectively, EPA is preventing those permits, which are issued by another federal agency, from ever being final. When project proponents are faced with such uncertainty, particularly when that uncertainty calls into question the reliability of lawfully issued federal permits, they will make fewer investments. Decreased investment in Section 404 permit-dependent projects will not only directly harm the vast array of industries whose operations require Section 404 permits, but will also result in less growth in numerous other sectors of the economy, since projects that require a Section 404 permit frequently provide substantial downstream economic benefits. The impact of the ruling in this case will therefore be felt throughout the U.S. economy.”

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.