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An Analysis of EPAs 404(c) Veto Authority
Ryan M. Posey
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Table of Contents
Introduction........................................................................................................................ 2
Guide to EPAs 404(c) Veto Authority............................................................................... 4
Litigation Addressing EPAs 404(c) Veto Authority ....................................................... 8
The Pre-Mingo Status of the 404(c) Veto Authority ................................................... 12
The Case of the Mingo Logan Coal CompanyA Monumental Expansion of EPAs
404(c) Veto Authority..................................................................................................... 12
Mingo Logan Coal Company v. US Army Corps of Engineers The Facts ..................... 13
Mingo Logan 1 ............................................................................................................... 14
Mingo Logan 2 ............................................................................................................... 17
The Mingo Logan Coal Decision An Evaluation of the Decision and Questions Left
Unanswered ..................................................................................................................... 19
Support for the Retroactive Post-Permit 404(c) Veto ................................................. 20
Questions Left Unanswered by the Court of Appeals ................................................... 23
Discussion A More Balanced Approach ........................................................................ 27
Amend 404(c) to Recognize the Post-Permit Veto and Establish a Heightened
Standard for its Application.......................................................................................... 27
Change the Standard for Judicial Review of the 404(c) Post-Permit Veto ................. 28
Provide Administrative Procedures to Mitigate Economic Hardship Caused by EPAs
Use of the 404(c) Post-Permit Veto ............................................................................ 30
Conclusion ........................................................................................................................ 31
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I. IntroductionThe Clean Water Act (CWA) gives the Environmental Protection Agency (EPA)
broad authority to restore the chemical, physical and biological integrity of the waters of
the United States.1
Part of this oversight includes the 404 veto authority, which gives
the EPA the power to veto permits for the discharge of dredged of fill material issued
under 404 by the Army Corps of Engineers (Corps) or by a state.2
How and to what
extent the EPA utilizes its 404 authority has become increasingly controversial.
Traditionally, the EPA has utilized its 404 veto authority either before or
contemporaneously with the Corps issuance of a 404 permit. However in the Mingo
Logan Coalcases, the EPA used its 404(c) veto authority retroactively, to effectively
revoke a 404(c) permit granted by the Corps years earlier. This action has raised new
questions regarding the extent of EPAs authority and the balancing of interests
between the purpose of the CWA and the due process considerations of applicants for
404(c) permits.
For some time it has been generally accepted in a legal and social context that
there are inherent differences in the prospective and retroactive application of the law.
There is a prevailing presumption that rules whose applications are prospective in
nature are to be favored, while those rules whose applications are retroactive receive
133 U.S.C. 1251(a). The objective (of the CWA) is to restore and maintain the
chemical, physical, and biological integrity of the Nations waters.233 U.S.C. 1344(c).
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heightened scrutiny.3
Important principles such as fundamental fairness and due
process provide sound cause for this distinction, and how these principles are balanced
against legitimate governmental interests is a question with which the courts often
struggle, in a wide variety of legal fields.
Are the benefits of retroactive application ever to outweigh the dubious due
process concerns of those against whom the rule is applied? This is the essential
question presented by the EPAs use of its retroactive or post-permit 404(c) veto.
How is the use of the EPAs veto authority curtailed by the concept of fundamental
fairness? Should this authority not receive greater scrutiny than the prospective use
of the authority granted by 404(c)?
This paper will analyze EPAs CWA 404(c) veto authority and this issue of EPAs
retroactive veto authority under 404(c). This papers analysis includes an evaluation of
the various interpretations of the EPAs 404(c) veto authority and ultimately proposes
an alternative way to address these questions. This paper proposes amendments to
section 404(c) that would explicitly grant the EPA both prospective and retroactively
veto authority, while subjecting an EPA retroactive veto under a higher standard than
that which would apply to a prospective veto. These amendments to the CWA would
further the purposes of the CWA while mitigating any potential due process
infringements to current 404 permit holders. This revised approach would provide
3Tam v. F.D.I.C., 830 F.Supp.2d 850, at 865 (DC CD 2011); citing Bowen v. Georgetown
University Hospital, 488 U.S. 204, at 208-209 (1988) (Retroactive application of a rule is
disfavored).
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more certainty and clarity in the permit process, while allowing the EPA the freedom to
act on new information and fulfill the mission delegated to it by the CWA.
Part II of this paper provides an overview of the sources of the 404(c) veto
authority and provides an understanding of how that authority has been interpreted by
the courts, in order to set the stage for an evaluation of the current state of the 404(c)
veto authority. Part III explores the circumstances surrounding the landmark Mingo
Logan Coaldecisions and analyzes the jurisprudence resulting from the EPAs first
retroactive use of its 404 veto authority. Part IV evaluates the Mingo Logan Coal
decision and the relative strength of the competing arguments for and against the use
of EPAs 404 retroactive veto. Finally, Part V proposes an alternative approach to that
taken by the Court of Appeals in Mingo Logan Coal, under which EPA would explicitly
have both retroactive and prospective veto authority under section 404(c) but would
have to meet a stricter standard for a retroactive veto of a section 404 permit.
II. Guide to EPAs 404(c) Veto Authority
The EPA was given broad authority in the Clean Water Act (CWA)4
in order to
restore the chemical, physical and biological integrity of the waters of the United
States.5
The CWA is a comprehensive act with provisions covering toxic pollution,
effluent limitations, the operation of water treatment plants and many other areas of
environmental protection in furtherance of this purpose. The specific issue of note in
433 U.S.C. 1251-1387.
533 U.S.C. 1251(a). The objective (of the CWA) is to restore and maintain the
chemical, physical, and biological integrity of the Nations waters.
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this discussion is the CWA provisions regarding the regulation of discharges of dredged
or fill material6.7
CWA 301(a) prohibits a point source discharge of pollutants by any person into
navigable waters without a 402 or 404 permit, and without compliance with certain
specified effluent limitations.8
CWA 404 gives the Corps of Engineers and states with
delegated authority the power to issue the permits required by 301(a) for the
discharge of dredged or fill material into navigable waters.9
While this authority to issue
permits was initially vested with the Corps, Congress also granted the EPA oversight
authority over the process.10
1344(c) provides:
(c) Denial or restriction of use of defined areas as disposal sites
The Administrator [of the EPA] is authorized to prohibit the specification
(including the withdrawal of specification) of any defined area as a disposal site,
and he is authorized to deny or restrict the use of any defined area for
specification (including the withdrawal of specification) as a disposal site,
whenever he determines, after notice and opportunity for public hearings, that
the discharge of such materials into such area will have an unacceptable adverse
effect on municipal water supplies, shellfish beds and fishery areas (including
spawning and breeding areas), wildlife, or recreational areas. Before making
6
Definition of fill material7
33 U.S.C. 1344.8
33 U.S.C. 1311.933 U.S.C. 1344(a). The Secretary may issue permitsfor the discharge of dredged or
fill material into the navigable waters at specified disposal sites. See also 33 U.S.C.
1344(g), providing EPA authority to delegate the authority under 1344(a) to states for
discharges in non-navigable water bodies.10
33 U.S.C. 1344(c).
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such determination, the Administrator shall consult with the Secretary. The
Administrator shall set forth in writing and make public his findings and his
reasons for making any determination under this subsection.11
Although not included in the text of the legislation, this subsection quickly
became known as the EPAs veto authority.12
Acting under the authority granted to it by 404(c), the EPA promulgated
regulations in the Code of Federal Regulations (CFR) both interpreting the scope of
power granted to it by 404(c) and establishing procedures for the execution of that
power. EPAs CFR procedures created to implement 404(c) refer to its authority under
section 404(c) as a veto authority.13
The EPAs CFR regulations indicate that this
authority can be used on both section 404 individual and section 404 general permits.14
However in regards to a general permit the veto is probably limited to each specific site
under the general permit which is found to have an unacceptable adverse effect on the
environment, and the EPA cannot use its 404(c) authority to veto the entirety of a
section 404 general permit.15
In regards to state-issued section 404 permits, the EPA
11Id.
12See Creppel v. U.S. Army Corps of Engineers, 1988 WL 70103, at 4 (US DC E.D. LA 1988)
(Under the statutory framework, EPAs Administrator has the authority to veto a Corps
permit); See also S.Conf.Rep. No. 1236, 92nd
Cong., 2d Sess. 142 (1972) (conference
committee report explaining that 404 grants EPA the power to veto a project that will
adversely affect the listed resources).13
40 C.F.R. 231.1(a).14
Id., see also 33 U.S.C. 1344(c).15
Id. EPAs interpretation only includes mention of withdrawing specification of a
defined disposal site. Whether the disposal at the particular site was originally
authorized by a section 404 individual or part of a broader section 404 general permit is
not determinative under the CFR, however there is no express annunciation of the
power to veto an entire section 404 general permit on its face.
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can effectively utilize its veto authority by withdrawing the approval of any state
administered programs and revoking the states authority to grant section 404 permits
generally.16
In addition, the CFR regulations interpret section 404 to allow the EPA to
prohibit the use of a specific site even before a section 404 permit is applied for or has
been issued.17
Although the exact procedures created by the agency to implement
404(c) are not central to this discussion, it is important to note that the EPA interprets
404(c) as granting it both prospective and retroactive veto powers.18
The EPAs use of the 404(c) veto authority is exceedingly rare; EPA only has
issued a Final Determination under 404(c) thirteen times since the CWAs inception in
1972)19
; however its use (and sometimes non-use) has become the subject of
considerable litigation and scholarly debate. The court decisions that are most relevant
to the current discussion are discussed below.
1640 C.F.R. 231.1(a). Under section 404(c), the *EPA+ Administrator may exercise a
veto over the specification by the U.S. Army Corps of Engineers or by a state for the
discharge of dredged or fill material. See also 33 U.S.C. 1344(i).17
40 C.F.R. 231.1(a). The *EPA+ Administrator may also prohibit the specification of a
site under section 404(c) with regard to any existing or potential disposal site before a
permit application has been submitted to or approved by the Corps or a state.18
40 C.F.R. 231.1(a). The Administrator is authorized to prohibit or otherwise restrict
a site whenever he determines that the discharge of dredged or fill material is having orwill have an unacceptable adverse effect.19
L. of Wetlands Reg. 7:1, footnote 3 (2013) (list of previous uses of the EPA 404(c)
veto); see also Questions and Answers Spruce Mine Final Determination, U.S. EPA, at 2
http://water.epa.gov/lawsregs/guidance/cwa/dredgdis/upload/FINAL_Spruce_404c_QA
_011311.pdf (last visited Apr. 19, 2013) (EPA has only completed 13 Final
Determinations in the Agencys 40 year history, emphasizing the careful consideration
EPA gives to its 404(c) responsibilities).
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A. Litigation Addressing EPAs 404(c) Veto AuthorityThe first landmark case involving EPAs 404(c) veto authority came in 1992 in
the caseJames City County v. EPA
20
(JCC 1), when the EPA elected to use its 404(c)
veto to prevent the construction of a dam and reservoir across Ware Creek in James City
County, Virginia. The Corps had granted James City County a permit under CWA 404,
which would have permitted the construction of a dam and reservoir to meet the James
City Countys increasing water demands. However the EPA decided that the project
would have an unacceptable adverse effect on the environment and used its 404(c)
authority, the rationale for which was based largely upon the existence of practicable
alternatives21
for James City County to meet its water needs.22
Ultimately the Fourth
Circuit found that EPAs conclusion that there were practicable alternatives was not
supported by substantial evidence,23
and remanded to the EPA to consider whether
environmental effects alone (independent of practicable alternatives) would alone
justify a veto.24
At the conclusion ofJCC 1 the EPA again decided on remand to utilize its 404(c)
authority, this time citing the unacceptable adverse effect on the environment as its
20
James City County, Va. v. EPA, 955 F.3d 254 (4th
Cir. 1993).21
See 40 C.F.R. 230.10(a)(2). An alternative is practicable if it is available and capable
of being done after taking into consideration cost, existing technology, and logistics in
light of overall project purposes. Id.22
James City County, Va. v. EPA, 955 F.3d 254, at 257-258 (4th
Cir. 1993).23
Id., at 259.24
Id., at 260 (Remands are generally appropriate when a court finds that the stated
basis for an agencys action is inadequate).
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sole justification.25
This action was again challenged inJames City County v. EPA26
(JCC
2). The district court inJCC 2 ruled for the County, and found that (1) the EPA lacked the
authority to base its 404(c) veto solely on the basis of adverse environmental impacts
and (2) the agency must consider the Countys need for water.27
However this decision
was reversed by the Fourth Circuit, which held that the EPA had the authority to use its
404(c) veto based solely upon adverse environmental impacts.28
JCC 2 is a significant
decision because it validated the EPAs interpretation of its 404(c) authority, which did
not require a balancing of environmental benefits against non-environmental costs.29
The Fourth Circuit found that both the statutory language of 404(c) and its legislative
history supported this interpretation by EPA.30
As a result ofJCC1 andJCC2, EPA under
section 404(c) can veto a section 404 permit either because EPA finds that there is a less
environmentally harmful practicable alternative or because EPA finds that the permit
25James City County, Va. v. EPA, 12 F.3d 1330, at 1332 (4th Cir. 1993) (On remand, the
EPA considered its administrative record and again vetoed the 404 permit, basing its
veto solely on environmental considerations).26
James City County, Va. v. EPA, 12 F.3d 1330 (4th
Cir. 1993).27
Id., at 1335.28
Id., at 1336 (in our view, the EPAs only function relating to the quantities of available
water is limited to assuring purity in whatever quantities the state and local agencies
provide. For these reasons, we think its veto based solely on environmental harms was
proper).29
40 C.F.R. Part 231. 404(c) does not require a balancing of environmental benefits
against non-environmental costs such as the benefits of the foregone project. This viewis based on the language of 404(c) which refers only to environmental factors.30
James City County, Va. v. EPA, 12 F.3d 1330, 1336 (4th
Cir. 1993) (Ultimately,
however, recognizing the EPAs expertise and concentrated concern with environmental
matters, Congress gave the final decision whether to permit a project to that agency. Its
authority to veto to protect the environment is practically unadorned). See also 118
Cong.Rec. 33,699 (1972) (Senate debate explaining that under 404 EPA should not
issue a permit for a project if the project will adversely affect the listed resources).
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will result in unacceptable adverse environmental impacts of the types referred to in
section 404(c).
The next key 404(c) decision came in the form of a citizen suit inAlliance to
Save the Mattaponi v. United States Army Corps of Engineers31
(Alliance 1). In this case
various environmental groups brought a citizen suit action against the EPA for its failure
to use its 404(c) veto authority to prevent the construction of a reservoir in King
William County, Virginia. While the central issue in that case was whether the EPAs
404(c) authority was discretionary or mandatory and thus subject to challenge in a
CWA citizen suit,32
(an issue that is not the principal focus of this paper), this decision is
important because it established that the arbitrary and capricious standard of review
applies to an EPA decision not to exercise its section 404(c) veto authority33
This
31Alliance to Save the Mattaponi v. United States Army Corps of Engineers, 515
F.Supp.2d 1 (District Ct. DC. 2007).32
Id., at 4. CWA 505(a)(2) authorizes citizen suits only where the EPA has failed to
perform a nondiscretionary duty. The court in denying plaintiffs CWA citizen suit held
that EPAs 404(c) authority was discretionary. See also City of Olmsted Falls v. EPA, 266
F. Supp.2d 718, 723 (N.D.Ohio 2003) (observing that the EPA veto power in 404(c) is
obviously discretionary). But see National Wildlife Federation v. Hanson, 859 F.2d
313, at 316(4th
Cir. 1988) (allowing a CWA citizen suit challenge to EPAs failure to veto
under 404(c)); South Carolina Coastal League v. U.S. Army Corps of Engineers, 2008 WL
4280376, at 6 (D.C.S.C. 2008) (applying Hanson, court stated that Congress could not
have intended to allow citizens to challenge erroneous wetlands determinations when
the EPA administrator makes them but to prohibit such challenges when the Corps
makes the determination and the EPA fails to exert its authority over the Corps
determination).33
Id., at 10. The plaintiffs Administrative Procedure Acts claims were held not to be
barred, and the court held that under 5 U.S.C. 706(2) the reviewing court shall set aside
agency action (or inaction which constitutes action in the case ofAlliance 1) found to be
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
See alsoPreserve Endangered Areas of Cobbs History, Inc., v. United States Corps of
Engineers, 87 F.3d 1242 (Eleventh Cir. 1996) (standard of review for EPAs failure to veto
the Corps issuance of a 404 permit is the arbitrary and capricious standard).
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context and the appropriate standard of review are important to the analysis of the
judicial review of EPA 404(c) actions followingAlliance 1.
WhileAlliance 1 dismissed the plaintiffs CWA claims, their claims under the
Administrative Procedure Act (APA) against the EPA for its failure to use its 404(c) veto
authority survived and were addressed byAlliance to Save the Mattaponi v. United
States Army Corps of Engineers34
(Alliance 2). InAlliance 2the court found that the
[EPA] Administrators decision not to veto the permit was not based on his
determination that the permit would not likely have unacceptable adverse effects, but
on a whole range of other reasons completely divorced from the statutory text.35
The
court then held that because the EPA relied on factors which Congress had not intended
it to consider in its application of its 404(c) veto authority, its decision not to use that
authority was arbitrary and capricious.36
Although the court recognized that 404(c)
granted the EPA discretion in the subsections application, the court also decided that
this discretion is not a roving license to ignore the statutory text.37 Put simply, the
EPA acts arbitrarily and capriciously if it considers factors outside of its statutory scope
in deciding to use or not to use its 404(c) veto authority. This decision is important to
the current discussion because it takes the concepts annunciated inJCC 2 (EPA does not
34Alliance to Save the Mattaponi v. United States Army Corps of Engineers, 606
F.Supp.2d 121 (District Ct. DC 2009). InAlliance 1 andAlliance 2, the EPA consideredfactors such as the cost of the project, lack of practicable alternatives, and anticipated
litigation (among other non-environmental factors) in determining whether to use its
404(c) veto authority.35
Id., at 140.36
Id., at 141.37
Id., at 140 citing Her Majesty the Queen in Right of Ontario v. EPA, 912 F.2d 1525, at
1533 (D.C. Cir. 1990).
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have to consider non-environmental factors in applying 404(c)) and expands them even
further (EPA cannotconsider non-environmental factors in applying 404(c)).
B.
Pre-Mingo Status of the 404(c) Veto Authority
Although the four cases discussed above deal with the prospective use of EPAs
404(c) veto authority, it is important to understand the philosophical shift in the
courts interpretations of 404(c) fromJCC 1 toAlliance 2. These cases evolved an
interpretation of section 404(c ) which transition from an interpretation that 1) EPA
must consider non-environmental considerations (JCC 2 District Court), to 2) EPA may
but does not have to consider non-environmental considerations (JCC 2 Fourth Circuit),
to 3) EPA may not consider non-environmental considerations (Alliance 2).
This increase in deference to the legislative intent of the CWA to preserve the
integrity of waters in the United States and the EPAs role in furtherance of that goal
allows us to understand 1) the foundation on which the EPAs first retroactive post-
permit veto was based and 2) the context by which the court would uphold that action.
III. The Case of the Mingo Logan Coal Company A Monumental Expansion ofEPAs 404(c) Veto Authority
The Mingo Logan Coal cases represented an issue of first impression for the
courts. While the cases discussed above all dealt with the prospective use of EPAs
404(c) veto authority and the scope of that authority, the circumstances surrounding
the Spruce No. 1 coal mine culminated in the EPAs first use of the 404(c) veto
authority after a section 404 permit had already been issued by the Corps. This
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presented the courts with a landmark opportunity to either significantly broaden or
restrict EPAs 404(c) authority, a decision which will have lasting implications for both
environmental regulation and the national economy.
A. Mingo Logan Coal Company v. US Army Corps of Engineers The FactsOn January 22, 2007, the Corps issued a 404 permit to the Mingo Logan Coal
Company (Mingo Logan).38
This permit authorized Mingo Logan to discharge fill
material resulting from mountaintop mining operations (at the Spruce No. 1 coal mine
in Logan County, West Virginia) into nearby streams.39
Although at multiple times
during the permit application process the EPA expressed concerns regarding potential
adverse impacts of the project to the environment, ultimately the EPA decided not to
use its 404(c) veto authority prior to the Corps issuance of the 404 permit.40
On September 3, 2009, the EPA requested that the Corps use its discretionary
authority under 33 C.F.R. 325.7 to suspend, revoke or modify the 404 permit it had
issued to Mingo Logan for the Spruce No. 1 coal mine.41
The EPA asserted that new
information and circumstances had revealed water quality impacts that were not
adequately addressed by the original permit.42
After consideration of the EPAs request,
38Mingo Logan Coal Co. Inc., v. EPA, 850 F.Supp.2d 133, at 133 (D. Ct. DC. 2012).
39Id., at 134.
40Id., at 135-136. EPA in multiple letters expressed concerns regarding potential
adverse impacts, however also recognized the progress Mingo Logan had made in its
various Environmental Impact Statements and mitigation plans.41
Id., at 137.42
Id.
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the Corps declined to do so, finding no grounds to suspend, revoke or modify the 404
permit.43
On January 13, 2011, after publishing a notice of its proposed determination and
a recommended determination, the EPA issued its Final Determination to withdraw the
specification of multiple sites as disposal sites for dredged or fill material in connection
with the construction of the Spruce No. 1 coal mine.44
The withdrawal of specifications
made up approximately eighty eight percent of the total discharge area authorized by
the 404 permit issued by the Corps.45
The EPA had made the unprecedented decision to utilize its 404(c) veto
authority more than two years after the 404 permit was originally issued by the Corps.
Mingo Logan challenged EPAs post-permit 404(c) veto, claiming that the EPA exceeded
its statutory authority under 404(c) of the CWA. Whether the EPA had this authority
would be dispositive of the entire case.46
B. Mingo Logan 1Mingo Logans challenge was first brought before the United States District Court
for the District of Columbia in Mingo Logan Coal Co. Inc., v. EPA47
(Mingo Logan 1).
43Id.
44Id.
45Id.
46Id.
47Mingo Logan Coal Co. Inc., v. EPA, 850 F.Supp.2d 133, at 133 (D. Ct. DC. 2012).
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Analysis of an agencys interpretation of a statute is governed by the Chevron Doctrine48
.
The court must first determine whether Congress has directly spoken on the question at
issue. If the intent of Congress is clear, the agency must give effect to the
unambiguously expressed intent of Congress.49
However if the statute is silent or
ambiguous, the court must determine whether the agencys determination is
reasonable.50
If the agencys interpretation is reasonable, under Chevron a court is
required to defer to and to follow the agencys reasonable interpretation of the statute.
The court in Mingo Logan 1 ,in analyzing the first prong of the Chevron doctrine,
found that EPAs interpretation was inconsistent with the CWA as a whole, and that EPA
did not have post-permit veto power under 404(c).51
The court stated:
There is no question that the sole provision relied upon by EPA does not
expressly authorize it to exercise the power it purported to exercise here, so the
case cannot be resolved in EPAs favor on Chevron grounds. At best, the text is
ambiguous.52
The court dismissed assertions by the EPA that the term whenever in 404(c)
permits the EPA to withdraw its assent to a disposal site at any time, even if the agency
did not exercise its veto authority originally before the Corps issued the section 404
48See Chevron, USA, Inc., v. Natural Res. Def. Council., Inc., 467 U.S. 837 (1984) (if a
statute administered by an agency is ambiguous, the courts will defer to the agencys
reasonable interpretation of the statute).49
Id., at 842-843.50
Id., at 843.51
Id., at 139, 148.52
Id., at 142.
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permit.53
The court also found this language troublesome because the EPA under
404(c) does not specify a disposal site and is only empowered under CWA section
404(c )to prohibit or decline to prohibit the Corps from doing so.54
It would make little
sense, the court reasoned, to interpret 404(c) to allow the EPA to withdraw a
decision that it has not made.55
Although the court expressed considerable doubts regarding whether EPAs
interpretation would be deemed lawful under the first step of the Chevron analysis, the
court proceeded to review EPAs interpretation under the second step ofChevron.56
The court held that even if EPAs interpretation was not subject to invalidation
under step one ofChevron, the interpretation of the statute was not reasonable and
could not be upheld under Chevron step two.57
The court reasoned that EPAs
interpretation would create an impractical and complicated non-revocation
revocation system by which a permit would be automatically revoked by an entirely
separate federal agency (than the agency who granted the permit). Further the court
held that it would be unreasonable, particularly in light of the lack of explicit statutory
53
Id., at 139 (The interpretation that 404(c) conveys a post-permit veto authority tothe EPA is a reading that does not exactly leap off the page.).54
Id., at 139.55
Id.56
Id., at 148 (For all the reasons set forth above, the Court is of the view that EPAs
position is inconsistent with the statute as a whole, and that its action could be deemed
unlawful at the first step of the Chevron analysis).57
Id., at 148.
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authority,58
to sow a lack of certainty into a system that was expressly intended to
provide finality.59
To summarize, the court in Mingo Logan 1 held that the EPA exceeded its
authority under 404(c) of the CWA by issuing a post-permit veto and granted summary
judgment to Mingo Logan. The EPA subsequently appealed the decision to the United
States Court of Appeals.
C. Mingo Logan 2
The EPAs appeal was heard before the United States Court of Appeals as Mingo
Logan Coal Co., v. EPA60
(Mingo Logan 2). The court reviewed the grant of summary
judgment de novo, and applied the same standards as those that governed the district
courts determination.61
Although the Court of Appeals applied the same Chevron
doctrine as the District Court, the former reached an entirely different conclusion than
the latter.
Under Chevron step one, the court held that 404(c) unambiguously expressed
the intent of Congress.62
The Court of Appeals held that although 404 of the CWA
vested the Corps with the authority to issue permits to discharge dredged and fill
58
Id., at 139 (EPAs position is that 404(c) grants it plenary authority to unilaterallymodify or revoke a permit that has been duly issued by the Corps the only permitting
agency identified in the statute and to do so at any time. This is a stunning power for
an agency to arrogate to itself when there is absolutely no mention of it in the statute.)59
Id., at 152.60
Mingo Logan Coal Co., Inc. v. EPA, 2013 WL 1729603 (Ct. App. Dc. Cir. April 23, 2013).61
Id., at 3.62
Id.
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material, Congress granted the EPA broad backstop authority over the Corp in
404(c).63
The court stated:
404 imposes no temporal limit on the Administrators [EPA] authority to
withdraw the Corps specification but instead expressly empowers him to
prohibit, restrict or withdraw the specification whenever he makes a
determination that the statutory unacceptable adverse effect will result.64
The Court of Appeals reasoned that by using the expansive conjunction
whenever, Congress manifested a clear intention to grant the EPA the authority to
withdraw a specification at anytime.65
The court found other textual support for this
interpretation in the use of withdrawal in 404(c). The Court of Appeals reasoned
that withdrawal is a term of retroactive application, when compared to the other
explicit authorities in the statute (prohibit/deny/restrict terms of prospective
application), so that the withdraw language is indicative that Congress intended the
EPA to possess post-permit veto authority.66
The court largely neglected to address the conclusion by the District Court that
the EPAs interpretation would trample on provisions that were intended to give
permits certainty and finality, or that public policy considerations of additional certainty
and finality in the permit process render EPAs interpretation suspect. The court
63Id.
64Id., at 4 citing 33 U.S.C. 1344(c).
65Id., at 4.
66Id. The text implies that EPAs 404(c) veto power can onlybe exercised post-permit.
If the court did not recognize EPAs post-permit veto authority it would render 404(c)s
withdraw language (when compared to prohibit /deny/modify terms of prospective
application) superfluous, a result to be avoided. Id.
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brushed these concerns aside, merely stating that despite the District Courts concerns,
the language of 404(c) clearly indicates that the Administrator retains authority to
withdraw a specified disposal site wheneverhe determines such [unacceptable adverse]
effects will result from discharges at the sites.67
The Court of Appeals held that clear
statutory language overrides any public policy considerations that the court may
identify, and the Court of Appeals therefore deferred to the EPAs interpretation.
The court did not engage in step two ofChevron, because its finding of
unambiguous intent in step one rendered analysis of step two unnecessary for the
disposition of the case; however, it is no stretch to say that the court inherently viewed
the EPAs interpretation as reasonable. The Court of Appeals reversed the District Court
decision and remanded the case for resolution of Mingo Logans outstanding APA
claims.68
IV. The Mingo Logan Coal Decision An Evaluation of the Decision andQuestions Left Unanswered
The rationale upholding the EPAs interpretation of section 404(c) appears to be
the stronger argument, because the U.S. Supreme Court has recently held, in City of
Arlington v. F.C.C.,69
that the Chevron doctrine applies to an administrative agencys
determination of the agencys authority under a particular statute. However, that
approach has left several unanswered questions which have yet to be resolved through
67Id., at 5.
68Id., at 6.
69City of Arlington, TX v. FCC, No. 11-1545, at 10 (2013).
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jurisprudence. Both the District Court and the Court of Appeals made a compelling case
from opposite vantage points on this issue, and by analyzing their arguments perhaps a
practical alternative may be found on common ground.
A. Support for the Retroactive Post-Permit 404(c) VetoThe strongest case for the EPAs interpretation of its authority under section
404(c) is that it is in furtherance of the purpose and legislative intent of the CWA
generally and 404(c) specifically. The objective of the CWA is to restore and maintain
the chemical, physical, and biological integrity of the Nations waters.70
As discussed in
the Brief History of the EPAs 404(c) Veto Authority, the case law fromJCC 1 toAlliance
2has been trending towards increasing the EPAs discretion and overall ability to further
this objective. SinceJCC1, the courts have increased the deference and discretion
given to the EPA in every subsequent 404(c) case. The purpose of section 404(c) of the
CWA and Congress intent under that section have become increasingly persuasive to
the courts in favor of the EPA. In a way, the jurisprudence on the 404(c) issue has
been moving towards the decision in Mingo Logan 2 for some time. The EPAs
interpretation, broadening its ability to protect the integrity of the Nations waters and
prevent unacceptable adverse impacts to the environment, is unsurprisingly persuasive
when viewed in this context.
The textual argument in favor of the EPAs interpretation is also a strong one.
Although the District Court in Mingo Logan 1 attempted to brush away the explicit term
7033 U.S.C. 1251(a).
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whenever in 404(c) as a reading which does not leap off the page,71
and dismissed
the absence of an explicit temporal limit on the EPAs 404(c) authority as inconsistent
with the statutory structure as a whole,72
these arguments fall short when considering
section 404(c)s statutory language and legislative history.
There are two rational conclusions which can be drawn when considering the
text of 404(c) alone. The first is that the rationale annunciated by the Court of Appeals
in Mingo Logan 2 is correct and the statute unambiguously states its intent in favor of
the EPAs interpretation. Under this conclusion, the EPAs interpretation is upheld. The
second is that although the text of 404(c) does not unambiguously convey EPA post-
permit veto authority; the EPAs interpretation is permissible/reasonable and should be
upheld under either Chevron or Skidmore deference.73
While Skidmore may provide
sufficient authority for a court to defer to EPAs interpretation of section 404(c) it is
important to note that Courts have consistently found Chevron deference to apply to
agency determinations regarding the scope of the agencys own statutory authority,
which further strengthens the argument of deference to the EPAs 404
interpretation.74
However, either approach results in an affirmation of the EPAs
71Mingo Logan Coal Co. Inc., v. EPA, 850 F.Supp.2d 133, at 139 (D. Ct. DC. 2012).
72Id., at 142.
73
Jim Rossi, Respecting Deference: Conceptualizing Skidmore Within the Architecture ofChevron, 42 Wm. & Mary L. Rev. 1105, at 1117, 1121(2001) (Skidmore deference
[Skidmore v. Swift & Co., 323 U.S. 134 (1944).] is sometimes referred to as weak
deference, in contrast to the strong deference that has evolved post-ChevronChevron
would advise deference to the agencys reasonable statutory interpretation. By
contrast, Skidmore would afford respect, dependent on the persuasive force of the
agencys position).74
City of Arlington, TX v. FCC, No. 11-1545, at 10 (2013).
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interpretation of its authority under section 404(c), and is more supportable than the
conclusion reached by the District Court in Mingo Logan 1.
In further support of the EPAs post-permit veto authority under section 404(c),
and a consideration not adequately measured by the courts in the Mingo Logan Coal Co.
case, is the impact of new information on existing 404(c) permits.75
Consider the
scenario in which a project developer applies for and is granted a 404 permit by the
Corps. Prior to the Corps issuance of the permit, the EPA (unaware of the extent of a
particular type of potential adverse environmental impact) declines to use its section
404(c )veto power and only later discovers that the project has an unacceptable adverse
impact on the environment. It is difficult to deduce how the purpose of the CWA would
be served by barring the EPA from acting under section 404(c) to veto the Corps-issued
permit on this new information to prevent or mitigate an unacceptable adverse impact
on the environment, as it would be under decision in Mingo Logan 1.
In addition, the EPA would needretroactive veto authority under 404(c) in
order to prohibit the use of a previously-issued general section 404 permit at a
particular site, where EPA learns after the issuance of a general permit that a particular
activity at a particular site under the general permit causes unacceptable environmental
harm.
75Mingo Logan Coal Co. Inc., v. EPA, 850 F.Supp.2d 133, at 137 (D. Ct. DC. 2012) (The
EPA considered and ultimately used its 404(c) post-permit veto authority due to new
information regarding the adverse impacts of the project on the environment).
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environmental protection.77
This would have addressed the issues raised by the District
Court in Mingo Logan 1 in a more direct and conclusive manner. Instead, the Court of
Appeals in Mingo Logan 2 evades this issue by using its conclusion in step 1 to justify all
other points of disagreement with the District Court in Mingo Logan 1, whereas to
have addressed each point directly would have presented a stronger argument. The
extremely infrequent use of the 404(c) veto by the EPA would also alleviate some
concerns regarding a loss of confidence in permits due to EPAs 404(c) postpermit
veto authority.
Second, an issue not addressed by either court is whether the retroactive post-
permit 404(c) may implicate equitable estoppel and due process limitations. Equitable
estoppel is a doctrine which a court may invoke to avoid injustice in particular cases.78
Consider the case of Mingo Logan, where the EPAs 404(c) veto was used over two
years after the issuance of the permit by the Corps. It is not difficult to imagine a
scenario in which Company X obtains a permit for Project Y and uses significant
resources and investments in furtherance of project Y in reliance on the permit that the
Corps issued to it. Several years into construction of project Y the EPA uses its 404(c)
post-permit veto, effectively ending the project at substantial economic loss to
Company X. Would it not be fundamentally unfair for Company X, who relied on the
permit issued by the Corps and not vetoed by the EPA, to suffer this loss?
77Library of Cong., A Legislative History of the Water Control Pollution Act Amendments
of 1972, 178 (1973).78
Mich. Express, Inc. v. US, 374 F.3d 424, at 427 (6th
Cir. 2004).
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V. Discussion A More Balanced ApproachAlthough the Court of Appeals in Mingo Logan 2 presented a strong argument in
support of the EPAs post-permit veto authority, the issues discussed above present
challenges to the practical implementation of such authority.
A. Recommendation that Congress Amend 404(c) to Recognize the Post-Permit Veto and Establish a Heightened Standard for its Application
The purpose of the CWA is best served by interpreting 404(c) as providing EPA
with both prospective and post-permit veto authority. However, the same substantive
standard should not apply to both types of veto. Under the current 404(c), the EPA
may veto a 404 permit whenever it determines that an unacceptable adverse impact
on the environment would result.89
The 404(c) post-permit veto should not be
reviewed under this standard; instead EPA should be required to base a retroactive veto
on a certain type of newly acquired information in order to exercise post-permit veto
authority under section 404(c ). Heightening the standard which the EPA must meet in
order to issue a post-permit veto would mitigate the current due process concerns and
uncertainty regarding current permits. For example, the amended statutory language
might state:
The EPA is authorized to use its 404(c) veto authority retroactively, after the
issuance of a 404(b) permit by the Corps, but can do so only in the event that:
8933 U.S.C. 1344(c).
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1) The EPA, based on newly discovered information, has determined that thereis a substantially increased adverse impact on the environment than that
which was present at the time the 404(b) permit was issued by the Corps; or
2) The permit holder intentionally concealed or misrepresented to the EPA or theCorps important information concerning an adverse environmental impact; or
3) Any other situation involving newly acquired information which substantiallychanges the grounds on which the 404(b) permit was originally issued by the
Corps.
By using a heightened standard such as the substantially increased standard in
the above proposal, the statute would limit the EPAs retroactive veto authority while
maintaining the agencys ability to use its 404(c) post-permit veto authority under the
circumstances necessary to achieve the goals of the CWA. This proposal may provide a
solution by which the benefits of retroactive section 404(c) veto authority and the
concerns of due process may be balanced.
B. Change the Standard for Judicial Review of the 404(c) Post-Permit VetoCurrently, the standard for judicial review of EPAs 404(c) veto authority,
whether prospective or post-permit in nature, is the arbitrary and capricious standard.90
Under this standard, the court considers whether the agencys decision was based on a
90James City County, Va. v. EPA, 12 F.3d 1330, at 1337 (4
thCir. 1993) (EPAs actions
under 404 to be reviewed under the arbitrary and capricious standard, not the
substantial evidence standard of review).
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consideration of the relevant factors and whether there was a clear error of judgment.91
This standard is very deferential to the agency, and unless the agencys action is based
on factors it is not authorized to consider under the relevant statute92
it will be upheld.
This standard was applied inJCC 2, and is in sharp contrast to the substantial evidence
standard applied by the court inJCC 1 (although erroneously). The substantial evidence
standardof review sets aside an agency action if it is unsupported by substantial
evidence.93
The substantial evidence standard is defined as reasonableness, or such
evidence as a reasonable mind might accept as adequate to support a conclusion.94
Comparatively it is less deferential than the arbitrary and capricious standard, although
the substantial evidence standard requires something less than a preponderance of the
evidence.95
By subjecting the EPAs use of the 404(c) post-permit veto authority to a
heightened standard of review such as the substantial evidence standard, as opposed to
the arbitrary and capricious standard, the courts oversight will limit the dangers of EPA
overuse and abuse of discretion in the application of its 404(c) post-permit veto
authority. This revised standard of judicial review would also provide current permit
91Motor Vehicle Mfrs. Assn of the United States, Inc. v. State Farm Mut. Auto. Ins. Co.,
483 U.S. 29 (1983).92
Id. Arbitrary and Capricious is defined as including a situation when the agency hasrelied on factors which Congress had not intended it to consider, entirely failed to
consider an important aspect of the problem, offered an explanation for this decision
that runs counter to the evidence before the agency, or is so implausible that it could
not be ascribed to a difference in view or the product of agency expertise. Id.93
5 U.S.C. 706(2)(E).94
Consolidated Edison Co. of N.Y. v. N.L.R.B., 305 U.S. 197, at 229 (1938).95
Consolo v. Federal Maritime Commission, 383 U.S. 607, at 620 (1966).
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holders with more confidence, as the EPA would be given less deference in its use of the
404(c) post-permit veto than in its use of the 404(c) prospective veto.
C.
Recommendation that Congress Provide Administrative Procedures to
Mitigate Economic Hardship Caused by EPAs Use of the 404(c) Post-
Permit Veto
A principal argument against the EPAs 404(c) post-permit veto is the potential
equitable estoppel concerns from permit holders who have invested large amounts of
resources in projects requiring a permit. Conceivably, and as was the case in Mingo
Logan Coal 1 and Mingo Logan Coal 2, a current permit holder could fall under the EPAs
404(c) post-permit veto power despite being in complete compliance with the section
404 permit earlier issued by the Corps.
This risk can be mitigated, by amending CWA 404 to afford current permit
holders a buffer should the EPA decided to exercise its 404(c) post-permit veto
authority. These amendments could include provisions regarding notice requirements
that EPA would be required to follow, mandating that EPA notify the holder of a CWA
section 404 permit of its intention to use its 404(c) veto authority or a statutorily
mandated amount of time between the date of notice and implementation of a 404(c)
veto, during which the permit holder could initiate judicial challenges to EPAs proposed
veto to avoid an EPA 404(c) veto from becoming effective. Provisions such as these
would give current permit holders increased protection from economic hardships
stemming from a potential 404(c) veto.
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VI. ConclusionThe present interpretation of 404(c) of the CWA is that it confers upon EPA the
authority to veto a 404 permit before, during and after that permit is issued by the
Corps. However, this authority of the EPA presents as many challenges as it does
benefits. It is inherent in our law and society to treat retroactive rules with more
scrutiny than prospective rules, and with good reason. However in this case, the
benefits of the 404(c) post-permit veto outweigh the due process and fundamental
fairness concerns that challenge it.
Still, while it is an admirable legal decision, Mingo Logan 2 does not present a
workable long-term solution to these conflicting concerns. Without compromise, the
EPAs exercise of404(c) post-permit veto authority will impair the goals of the CWA
and will result in complicated litigation in the courts, requiring courts to weigh
application of EPAs post-permit veto authority with the constitutional rights of those it
is applied against. While the EPA has rarely used its 404(c) veto authority in the past,
the expansion of EPA authority creates the potential for increased use of that authority
in the future, and the stakes therefore are high for section 404 permit holders with
significant investments now vulnerable to EPA veto action.
The best way to move forward is to find common ground, to allow the EPA to
have 404(c) post-permit veto authority but to limit the ways and the scope in which it
can be applied. By establishing substantive and procedural safeguards to limit the EPAs
newfound section 404(c) post-permit authority, the CWA can achieve its purposes
while providing increased certainty and protection to current 404 permit holders.
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Although retroactive and prospective rules should be treated differently, in the context
of the CWA and specifically 404(c) it is preferable to have both types of rule under
CWA section 404(c).