Court OKs EPA’s Revoking Permit Years after Issuance

The U.S. Court of Appeals for the District of Columbia Circuit ruled on July 19 that the U.S. Environmental Protection Agency (EPA) had properly used its “broad veto authority” under the Clean Water Act (CWA) when it revoked a Section 404 dredge-and-fill permit several years after it had been legally issued by the U.S. Army Corps of Engineers (Corps) and relied upon by the permittee.

Throughout this long legal battle, AGC has consistently weighed in on behalf of the construction industry, which frequently relies on Section 404 permits to build the nation’s public and private infrastructure.  It all began in 2007, when the Corps issued Mingo Logan a permit to excavate the tops of several West Virginia mountains and dispose of the excess soil/rock in three surrounding valleys containing streams.  Four years later, in 2011, after additional study, EPA decided the project would result in “unacceptable adverse effects” to the environment and withdrew approval of nearly 90 percent of the total discharge area authorized by the permit, placing the project in jeopardy. Mingo Logan brought suit claiming that EPA did not have authority under CWA Section 404(c) to withdraw the permit after it had been issued and, alternatively, that EPA’s action was in violation of the Administrative Procedures Act (APA).

As reported by AGC, in 2013, the D.C. Circuit Court reversed a lower court’s prior decision, which found that EPA had the authority to revoke such discharge permits that have already been approved and issued by the Corps.  (AGC joined a coalition of industry groups in filing an amicus brief in the D.C. Circuit attempting to convince the appellate court that the lower court was correct to block EPA’s action.)  The appeals court also sent the case back to the DC District Court to consider Mingo Logan’s APA challenges. (AGC also joined in a brief asking the U.S. Supreme Court to review EPA’s after-the-fact veto of Mingo Logan’s permit but the Court denied certiorari on the issue.)   In 2014, the district court found that EPA’s withdrawal was not arbitrary and capricious.  In a presumably final step, Mingo Logan appealed that decision back to the D.C. Circuit. The company argued that EPA failed to engage in reasoned decision making by ignoring the millions of dollars Mingo Logan invested in reliance on the initial permit.  But ultimately, in the opinion issued July 19, the D.C. Circuit affirmed the district court, holding that EPA had adequately “considered the relevant factors and adequately explained its decision.” The case is Mingo Logan Coal Co. v. EPA, case number 14-5305, in the U.S. Court of Appeals for the District of Columbia Circuit.

AGC testified before Congress that EPA’s authority should not extend beyond the traditional permit process and that once the Corps of Engineers issues a permit, the contractor should not have to worry about a retroactive permit veto years after construction has already begun.

Background

CWA Section 404(c) provides EPA authority to “deny or restrict the use of any defined area for specification (including the withdrawal of specification).”  Although EPA has used its Section 404(c) veto authority only sparingly in the past, the decision in Mingo Logan to retroactively nullify a Corps permit several years after it was issued represents a significant expansion of that authority.  The threat of retroactive EPA vetoes of final permit decisions will undermine the finality and certainty of the CWA Section 404 permit process.  AGC will continue to monitor this case and any additional action under EPA’s CWA 404(c) authority.