Posted 3/25/2014
Pacific Legal Foundation
As I explained in yesterday’s post (see below), the Supreme Court let stand an unfortunate decision by the D.C. Court of Appeals that allows the EPA to amend or revoke a section 404, Clean Water Act discharge permit, at will. Thereby depriving the permit holder of any vested right in the permit, even when the permit holder is in full compliance with all permit conditions and there are no changes in circumstances. However, today, U.S. Senator David Vitter (R-LA) and Senator Joe Manchin (D-W.VA) took action to stop this abuse of power. These senators have introduced a bill, The Regulatory Fairness Act of 2014, that prohibits the EPA from revoking a duly issued permit.
“The Regulatory Fairness Act of 2014 would give American businesses a fair shot at going through the process of building or mining without having to worry about politics getting in the way,” said Vitter. “After seeing the EPA grossly overstep on established permitting procedures, it’s clear that this legislation is necessary to prevent a serious disincentive to investing in America and distinctly state what the EPA can and cannot do.”
Now that the courts have failed to protect permit holders from agency overreaching the only option is a legislative fix. Could this be it?
Posted March 24, 2014 at Pacific Legal Foundation’s blog:
What a Travesty!
Today, the U.S. Supreme Court refused to hear the case of Mingo Logan Coal Company, Inc. v. Environmental Protection Agency, in which the Court of Appeals upheld EPA’s claim that it could amend or revoke a Clean Water Act, §404 discharge permit, at any time in the future, regardless of how much the permit holder has relied on the permit and even if the permit holder is in full compliance with all permit conditions and there has been no change in circumstances.
In effect, this decision authorizes the EPA to be a law unto itself!
Here are the tragic facts:
Mingo Logan owns a surface coal mine in West Virginia known as Spruce No. 1. In January, 2007, the Army Corps of Engineers issued Mingo Logan a Clean Water Act §404 permit authorizing the discharge of fill material into 8.11 acres of “waters of the United States,” including 0.12 acres of wetland (an abandoned farm pond). This permit was issued after more than ten years of study and evaluation by the Corps, EPA, and other federal and states agencies. A full Environmental Impact Statement (EIS) was prepared involving thousands of man-hours and multiple agencies, including the EPA. This was the only full EIS ever prepared for a mining project of this type. The Draft EIS covered 1600 pages and the Final EIS included 58 pages specifically addressing EPA comments. The permit cost Mingo Logan millions of dollars and imposed mitigation requiring the creation of new wetlands, enhancement of thousands of feet of existing streams, planting of thousands of trees and shrubs, and long-term monitoring to ensure compliance with all permit conditions. The permit was issued without EPA objection.
However, two and a half years after the Corps issued a §404 permit to Mingo Logan, the EPA pressed the Corps to suspend, revoke, or modify the permit. In September, 2009, the District Engineer of the Corps issued a letter to the EPA refusing to do so explaining such action was only authorized under 33 CFR §325.7 upon a consideration of five factors: “the extent of the permittee’s compliance with the terms of its permit; whether circumstances relating to the authorized activity have changed since the permit was issued; significant permit objections which were not earlier considered; revisions to law; and the extent to which permit suspension, revocation, or modification would adversely affect plans, investments and actions the permittee has reasonably taken in reliance on the permit.”
After a consideration of these factors and EPA concerns, the District Engineer determined that Mingo Logan was in full compliance with the permit, there were no changes in circumstances or the law requiring a change to the permit, and all objections had been addressed in the previous multi-year review. The State of West Virginia also issued a letter affirming that Mingo Logan was in complete compliance with all water quality standards and castigating EPA for suggesting further environmental review was required:
At some point, a project must be deemed to have been studied enough to meet NEPA’s requirements. This is the most heavily studied and scrutinized surface mining coal operation in the history of a state which has a long history with the coal mining industry. It has previously been through an EIS, litigation before at least two federal trial courts and twelve years of continuing scrutiny by the WVDEP, USEPA, the Corps and other federal agencies. In addition, it has been examined by the State permitting quality control panel comprised of representatives of the environmental community, the coal industry, the WVDEP and the federal Office of Surface Mining Reclamation and Enforcement.
Having gained no support from either the Corps or the State, EPA initiated unilateral proceedings to suspend, revoke, or modify the Mingo Logan permit, three years after its issuance. Those proceedings are based on the EPA’s claim of authority under a novel interpretation of §404 (c) of the Clean Water Act that authorizes EPA to designate disposal sites for discharged materials. Although the EPA had used this “veto” power prior to the issuance of a §404 permit, this was the first time the EPA had sought to exercise that “veto” after a permit had been granted. Mingo Logan challenged the application of §404 (c) to existing permits in court with a compelling argument that EPA’s interpretation is inconsistent with prior practice, the language and structure of the Act, and is contrary to the will of Congress as recorded in the legislative history.
The trial court agreed with Mingo Logan and ruled the EPA had far exceeded its authority under the law. Unfortunately, the D.C. Circuit Court of Appeals reversed and upheld the EPA’s expansive claim of authority. Today, the Supreme Court decided to not review the case.
This is a travesty because the EPA’s heavy-handed exercise of power in this way shows a complete disdain for property rights and a wholesale disregard for economic realities that is difficult to comprehend. If EPA can “veto” an existing §404 permit, years after its issuance and even when the permit holder is in full compliance with all permit conditions, why would a permit applicant risk expending thousands, or in the case of Mingo Logan, millions, of dollars in reliance on such a permit? The mere acquisition of a §404 permit is already prohibitively expensive. According to the Supreme Court, “O]ver $1.7 billion is spent each year by the private and public sectors obtaining wetlands permits.”
The EPA’s action against the Mingo Logan permit sets a dangerous precedent. One can predict with almost mathematical certainty that it will have a chilling effect on future projects and do incalculable harm to the local and national economy. The Corps processes tens of thousands of §404 permits each year. Now, each of these permits is subject to recall by the EPA, at any time in the future. Under EPA’s interpretation of its “veto” power, no permit holder receives a final permit on which he may rely. No matter how much effort, time and cost, the permit holder may expend in permit preparation, acquisition and compliance, he can never be sure he has a vested right in the permit issued. The EPA can snatch the permit away at any time. This is the very essence of arbitrary government.