On July 11, 2014, the United States Court of Appeals for the District of Columbia Circuit upheld the United States Environmental Protection Agency’s (EPA) “Enhanced Coordination Process,” which was developed with the United States Army Corps of Engineers (the USACE) for review of Section 404 Clean Water Act (CWA) permits. The Court also found that EPA’s “Final Guidance” for the issuance of certain Section 402 CWA permits relating to the coal mining industry was not a final agency action subject to review. This decision reversed a lower court ruling in favor of the National Mining Association and Kentucky Coal Association. Although the policies at issue arose in the context of coal mining in the Appalachian region, the decision impacts the entire regulated industry by imposing further EPA oversight into CWA permit decisions. A copy of the D.C. Circuit’s opinion, called National Mining Association v. McCarthy, can be accessed here.
CWA Section 404 requires a permit to discharge dredged or fill material into waters of the United States. The USACE is responsible for issuing Section 404 permits, although EPA has authority to review and deny a permit if a discharge would have an unacceptable adverse effect on certain bodies of water, wildlife or recreation areas. CWA Section 402 permits, also known as National Pollutant Discharge Elimination System (NPDES) permits, regulate the discharge of pollutants from a point source into waters of the United States. These permits, which are frequently issued by an authorized state permitting agency, typically set specific discharge limits, establish special conditions and impose monitoring and reporting requirements. States administering Section 402 permits must submit a proposed permit to EPA for review. EPA may then object if the permit does not meet state or CWA water quality standards.
In 2009, EPA announced a new Enhanced Coordination Process that would filter Section 404 permit applications through a database and allow EPA to identify permits that might run afoul of EPA guidelines. In 2011, EPA issued a Final Guidance document recommending that states impose more stringent numerical standards for water conductivity when issuing Section 402 permits for surface coal mines in the Appalachian region.
In its lawsuit, the National Mining Association, industry groups and several states alleged that EPA exceeded its CWA authority by issuing the Enhanced Coordination Process and Final Guidance because the documents established impermissible requirements and roadblocks into the Sections 402 and 404 permitting process. The D.C. Circuit rejected these parties’ claims, concluding that EPA had authority to issue the Enhanced Coordination Process and further determining that their challenge to the Final Guidance was premature. Specifically, the Appeals Court held that EPA and the USACE had authority to enact the Enhanced Coordination Process as the CWA did not implicitly bar its issuance. Further, the Appeals Court determined that the Final Guidance merely constituted a general statement of policy, and therefore, imposed no legal obligations on states or permit applicants.
The D.C. Circuit’s opinion could impact the Sections 402 and 404 permit process by subjecting applicants, particularly those in the mining industry, to additional EPA regulatory review. For example, critics of this decision argue that it pressures states and permit applicants to conform their permits to the Final Guidance, even though the Final Guidance is merely advisory. Further, critics believe the decision could encourage EPA and other agencies to more frequently rely upon the issuance of policy guidance, rather than formal rulemaking, thereby exposing the regulated community to a more subjective regulatory process.
Although the Court of Appeals’ decision involves coal mining in the Appalachian region, businesses should be mindful of its potential influence on other judicial and agency decisions.