Analysis of EPA's 404(c) Veto Authority

7/30/2019 Analysis of EPA's 404(c) Veto Authority

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An Analysis of EPAs 404(c) Veto Authority

Ryan M. Posey


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Ryan M. Posey, An Analysis of EPAs 404(c) Veto Authority

Posey 1

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.



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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


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).

Documents

Analysis of EPA's 404(c) Veto Authority