Recent developments in two cases – one a long-running case involving a West Virginia surface coal mine and another involving a hard rock mine in Alaska – highlight the continuing controversy surrounding EPA’s authority to “veto” Clean Water Act Section 404 permits.

Under Section 404 of the Clean Water Act, the U.S. Army Corps of Engineers (Corps) has primary authority to issue Section 404 permits, which authorize the discharge of dredge or fill material into waters of the United States. Under Section 404(c) of the Act, however, EPA has authority to deny “specification” of a given waterway as a site in which such dredge or fill material can be placed. This decision by EPA is commonly referred to as a “veto” of a Section 404 permit.

In most instances, EPA’s approval or disapproval of specification for a site occurs during the Section 404 permitting process. In rare instances, however, EPA has used its Section 404(c) authority to effectively “veto” a Section 404 permit after the permit has been issued by the Corps. Additionally, it appears that EPA is also preparing to exercise its Section 404(c) veto authority before a permit is even applied for. The ability of EPA to “retroactively” or “preemptively” veto a Section 404 permit has created considerable uncertainty for many projects, particularly those in the mining industry, and has generated significant recent litigation.

Retroactive EPA Veto – The Spruce Mine Case

In West Virginia, the developers of a surface coal mining operation known as the Spruce Mine have been litigating the scope of EPA’s Section 404 veto power for several years. The Spruce Mine obtained a Section 404 permit from the Corps in 2007. However, in 2011, EPA issued a decision under Section 404(c) of the Clean Water Act vetoing the Corps’ permitting decision and invalidating the permit.

Mingo Logan Coal Company, the current owner of the Spruce Mine project, challenged EPA’s decision in federal court. A federal trial judge in the District of Columbia ruled in 2012 that EPA lacked authority to veto an already-issued Section 404 permit. The D.C. Circuit Court of Appeals reversed that decision, finding that EPA has authority to withdraw specification for use of a waterway as a disposal site “whenever” it finds that the criteria in Section 404(c) are met, even if the Corps has already issued a Section 404 permit.

Mingo Logan and a host of industry groups petitioned the U.S. Supreme Court to review the D.C. Circuit’s decision, but the Supreme Court declined to hear the case. As a result, the case returned to the federal trial court, for a review of whether EPA acted reasonably in making its veto decision on the Spruce Mine. On Sept. 30, 2014, the federal trial court ruled that EPA’s veto decision was reasonable and consistent with the Clean Water Act.

In late November 2014, Mingo Logan filed a second appeal with the D.C. Circuit. This new appeal will challenge the merits of EPA’s decision. Although the D.C. Circuit is unlikely to reconsider its prior ruling that EPA has authority to retroactively issue the permit, if the D.C. Circuit agrees that EPA acted unreasonably in vetoing this particular permit, its decision could restrict the number of cases in which a retroactive veto is available to EPA.

Preemptive Veto – The Pebble Mine Case

While the owners of the Spruce Mine have challenged EPA’s ability to veto a permit that has already been issued, the owners of the Pebble Mine in Alaska are arguing that EPA cannot veto a permit that has never even been applied for. The Pebble Mine is a large, proposed hard rock mine in Alaska. The project came to EPA’s attention before its owners had applied for any Section 404 permit from the Corps, and certain personnel at EPA began work on various studies that many believe will ultimately be used as a basis for a decision to deny any potential Section 404 permit for the Pebble Mine permit under Section 404(c).

Aware of this activity, the owners of the Pebble Mine filed suit in federal court in Alaska, asking the court to rule that EPA cannot “preemptively” veto a Section 404 permit that has never been applied for. Although its purpose is largely to invalidate any potential preemptive veto by EPA, the Pebble Mine lawsuit is based primarily on the Federal Advisory Committee Act (FACA), which requires the disclosure of certain information about interest groups participating in federal agency policymaking. The Pebble Mine developers allege that for many years EPA has inappropriately worked with environmental interest groups in developing studies used to justify the proposed preemptive veto of the Pebble Mine, in violation of the FACA.

On Nov. 24 and Dec. 4, 2014, the federal trial court in Alaska entered injunction orders preventing EPA from taking any further action with respect to the proposed veto of the Pebble Mine project. The case remains pending before the trial court in Alaska with the parties due to continue submitting briefs through March 2015.

The outcome of the Pebble Mine and Spruce Mine cases is expected to have a significant impact on EPA’s role in the Section 404 permitting process. We will continue to monitor developments regarding these issues in future editions of the Environmental Letter.