In a closely watched case of first impression, the D.C. Circuit Court of Appeals ruled on April 23, 2013 that Clean Water Act Section 404(c) “expressly and unambiguously” authorizes the U.S. Environmental Protection Agency (“EPA”) to withdraw previously-approved disposal sites specified in a Section 404 permit issued by the U. S Army Corps of Engineers, after the permit has been finalized. Mingo Logan Coal Co. v. USEPA, No. 12-5150 (D.C. Cir. April 23, 2013).

Accordingly, the Court reversed the district court’s prior ruling that EPA had exceeded its authority in retroactively vetoing specified disposal sites for a mountaintop mining operation that had been authorized in a Corps 404 permit. The Court did not reach the merits of whether EPA’s withdrawal of certain specified disposal sites was arbitrary and capricious or otherwise not in accordance with law, and remanded the matter to the district court for further review of that issue.

At stake in Mingo Logan was the scope of EPA’s authority to “veto” Section 404 wetlands permits issued by the Corps of Engineers. Under the CWA, the Corps has primary authority to issue Section 404 permits to allow dredge and fill material to be placed in waters of the U.S. 33 U.S.C. § 1311(a). However, Section 404(c) of the Act gives EPA a lead role in determining environmental impacts from proposed Section 404 activities. EPA had in past permit proceedings invoked the “veto” powers of Section 404(c) to prevent the issuance of a permit by the Corps when the Agency determined the proposed discharge would have unacceptable environmental effects. EPA had not, prior to the Mingo Logan Section 404 permit, used that authority to revoke portions or all of a previously approved and finalized 404 permit.

With regard to the Mingo Logan Section 404 permit, during the Corps Section 404 permitting process EPA had expressed concern about certain potential adverse environmental impacts from the proposed activities, but had not formally objected to or prohibited the issuance of the permit. Indeed, the administrative record for the permit indicated EPA had communicated to the Corps that the Agency had “no intention of taking our Spruce Mine concerns any further from a Section 404 standpoint.” Subsequent to issuance of the 404 permit in 2007, EPA asked the Corps to use its discretionary authority under 33 C.F.R. § 325.7 to revoke or modify the permit to eliminate discharges to certain waters, asserting there was “new information and circumstances” justifying such action. After the Corps did not accede to EPA’s request, EPA proceeded with a notice and comment action to withdraw certain specified disposal sites from the permit, effectively amending the 404 permit. The permit holder challenged EPA’s action and prevailed in federal district court on its claim that EPA lacked authority to retroactively veto Corps-issued Section 404 permits. Mingo Logan Coal Co. v. USEPA, 850 F.Supp.2d 133 (D.D.C. 2012).

The Circuit Court’s analysis began and ended with the statutory text of Section 404(c). In particular, the Court deemed Section 404(c ) unambiguous in expressly authorizing EPA not only to “prohibit” the specification of disposal sites, e.g., by prohibiting the issuance of a Section 404 permit or the inclusion of prohibited disposal sites in the first instance, but also to “withdraw” previously approved specifications. The text of Section 404(c) ties this authority to the phrase “whenever [the EPA Administrator] determines” such action is necessary to avoid “unacceptable adverse effects” on specified types of potential environmental harm (namely, municipal water supplies, shellfish beds and fishery areas, wildlife and recreational areas). 33 U.S.C. § 1344(c). The Court characterized EPA’s authority as “a broad environmental ‘backstop’” and concluded that Section 404 imposed “no temporal limit” on the withdrawal authority. In the Court’s view, the use of the “expansive conjunction ‘whenever’” in Section 404(c) demonstrated that Congress gave EPA the ability to “prohibit/deny/restrict/withdraw a specification at any time.”

The Court further rejected the permittee’s arguments that EPA’s veto powers could operate only pre-permit, finding such a reading contradicted by the express authorization noted above (and noting that EPA’s interpretation was longstanding, having been first articulated in 1979 guidance). The Court also found that the CWA permit shield provision of Section 404(p) was not at odds with retroactive withdrawal of specified disposal sites since such action effectively amends a permit “so that discharges at the previously specified sites are no longer in ‘[c]ompliance with’ the permit….” Also unavailing was the permittee’s argument that Section 404(q), which requires the Corps and EPA to cooperate in issuing Section 404 permits, placed limits on the express “withdrawal” language in Section 404(c). The Court also rejected the argument that contrary legislative history could override the unambiguous language used in the statute. As noted, the Court remanded the matter back to the district court for review of the permittee’s challenge that EPA’s withdrawal was improper under the Administrative Procedures Act.

The Mingo Logan case is important as it is the first time a federal court has determined that EPA may exercise CWA Section 404(c) “veto” authority after a valid Corps permit has been issued in final form. The remand for analysis of whether EPA’s withdrawal on the specific facts of this case was proper will be important to watch, both because of the Agency’s post-permit flip-flop of the position it took with the Corps during the permit process, and because the Section 404(c) authority is on its face limited to certain types of adverse environmental impacts, and the record may or may not support EPA’s findings of adverse impact. Whatever the result on remand, however, this case represents a new phase of dramatic uncertainty for Section 404 permit holders who understandably rely on the authorizations in a finally issued permit to plan and conduct business operations consistent with their CWA permit.