On September 30, 2014, the DC District Court issued a key decision regarding EPA’s authority under Section 404(c) of the Clean Water Act to “veto” a US Army Corps of Engineer’s permit decision.

In 2007, the US Army Corps of Engineers issued a Clean Water Act (CWA) permit for Mingo Logan Coal Company, Inc.’s Spruce 1 Mine in West Virginia.  In 2011, EPA withdrew the permit, invoking its veto authority under section 404(c) of CWA.  Mingo Logan brought a lawsuit claiming that EPA did not have statutory authority under CWA § 404(c) to withdraw a permit after it had been issued, and alternatively that EPA’s action was arbitrary, capricious or otherwise not in accordance with the law in violation of the Administrative Procedure Act (APA).  In 2012, the DC District Court ruled in favor of Mingo Logan on the issue of EPA’s authority under CWA and as a result, did not reach the APA issue.  The DC Circuit Court reversed on appeal, holding that EPA has post-permit withdrawal authority and remanding to the DC District Court to resolve the APA claim.  The Supreme Court denied certiorari in March 2014. 

On September 30, 2014, the DC District Court issued an order upholding EPA’s decision to revoke the permit on the merits.  The Court concluded EPA’s decision was reasonable and supported by its Final Determination issued in January of 2011.  The Final Determination rested on the grounds that the discharges authorized by Mingo Logan’s 404 permit would cause unacceptable adverse effects on wildlife, both within the footprint of the fill (direct effects), and alternatively, downstream from the footprint of the fill (downstream effects). 

Regarding the direct effects, the Court upheld EPA’s conclusion that the mine would cause unacceptable adverse direct effects on wildlife.  The Court found the Final Determination explained in detail the adverse direct effects, including the destruction of 6.6 miles of high quality stream habitat.  The Court also rejected three arguments presented by Mingo Logan regarding direct effects of the mine.

First, Mingo Logan argued that EPA was required to provide substantial new information demonstrating that the fill sites would have unacceptable adverse effects – i.e. information that arose after the permit was issued in 2007.  Relying on the DC Circuit’s order, the Court noted that EPA could invoke its veto authority at any time and there was no “substantive limit” in the statute and regulations requiring EPA to present new information when exercising its post-permit veto authority.  Order at 17.  The Court implied that the preamble to EPA’s regulations for CWA implementation might provide some ground for a requirement of substantial new information in post-permit withdrawal, but only where EPA had not raised any objections during the course of the permit process or any objections were resolved to EPA’s satisfaction.  However in Mingo Logan’s case, EPA had raised objections and “harbored consistent misgivings throughout the permit application process.”  Id. at 24.  Therefore, the Court noted that while “in some cases it might be arbitrary and capricious for an agency to look at the same information it looked at four years before and come to a completely different conclusion…, this is not one of those cases.”  Id. at 20. 

Second, Mingo Logan claimed that EPA failed to demonstrate the 404 discharges would actually result in unacceptable direct adverse effects to wildlife.  The Court held that EPA’s conclusion that the discharges would have unacceptable direct adverse effects was reasonable and sufficiently supported by the record.  The Court also found Mingo Logan’s argument that the eradication of wildlife within a fill site is routine and occurs whenever fill material is discharged into water under CWA did not undermine the reasonableness of EPA’s conclusion. 

Third, the Court rejected Mingo Logan’s argument that EPA failed to consider the anticipated results of the permit’s mitigation requirements, finding the Final Determination both considered the mitigation requirements and provided a reasoned explanation as to why EPA found them insufficient to overcome the adverse effects.

Although the Court’s holding regarding direct effects was dispositive of the case, the Court also found as reasonable EPA’s conclusion that the permit would cause unacceptable adverse downstream effects, which provided an independent basis for upholding EPA’s Final Determination.  Mingo Logan argued that the downstream effects caused by discharges from sediment ponds that contain elevated levels of contaminants fall under the category of general pollutants under CWA § 402 (administered by West Virginia), not § 404.  Therefore, Mingo Logan contended that EPA was not authorized to consider those downstream consequences in revoking the 404 permit, or in the alternative, was at least required to use West Virginia’s water quality standards when considering downstream effects.  The Court disagreed that the Final Determination addressed outflow from sediment ponds specifically, finding instead that it merely concluded that the permit dredging activities would negatively affect wildlife below the ponds.  As a result, the Court found that EPA had not usurped West Virginia’s regulatory authority under § 402.  In any event, the Court also found that EPA’s section 404(c) authority was broad enough to encompass consideration of the downstream effects from a discharge site, and EPA was not bound by West Virginia’s water quality standards. 

Finally, the Court rejected Mingo Logan’s argument that EPA failed to demonstrate a causal link between the downstream effects and the 404 discharges.  While the Court agreed that EPA was required to show a causal link between the discharges and the adverse downstream effects, the Court found EPA had satisfied that burden by comparing the proposed discharges to other mining operations where streams had been impacted and reasonably concluding that the proposed activities would cause a loss of freshwater dilution.