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EPA, industry square off in battle over Clean Water Act veto

U.S. EPA will head to court tomorrow to defend its authority under the Clean Water Act to revoke a strip mining permit issued by the Army Corps of Engineers.

At issue is whether EPA erred in retroactively vetoing Army Corps approval for a large mountaintop-removal project in West Virginia, years after it was granted.

Industry, environmentalists and legal experts agree that the case, before the U.S. Court of Appeals for the District of Columbia Circuit, has far-reaching implications and could ultimately define the limits of the Clean Water Act.

While environmentalists cheered the agency's bold move in 2011, leaders of various industries that rely on such permits became alarmed. The veto also shocked coal miners worried about their jobs, as portrayed by a 2011 CNN documentary on the mountaintop mining debate (Greenwire, Aug. 10, 2011).

Last year, District of Columbia U.S. District Judge Amy Berman Jackson scrapped the veto and suggested that EPA relied on "magical thinking" in its interpretation of the Clean Water Act (E&ENews PM, March 23, 2012).

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EPA quickly appealed the ruling, but the opinion bolstered industry groups.

"I think she had a very reasoned and rational opinion, and I think it will be upheld," said Katie Sweeney, general counsel for the National Mining Association, one of the groups that filed briefs in support of the project.

EPA's veto in early 2011 nixed key portions of a 2007 Army Corps permit for Arch Coal Inc. subsidiary Mingo Logan Coal Co.'s Spruce No. 1 mine in southern West Virginia. It is one of the largest projects of its kind ever proposed.

A provision in Section 404 of the Clean Water Act -- dealing with dredge and fill issues, critical to strip mining -- gives the EPA administrator the authority to scrap a "specification" in an Army Corps permit "whenever he determines" that it will have unacceptable impacts.

However, industry groups say "whenever" refers to the permitting process -- not after the permit has been issued.

"This is the first time EPA has really used a 404 veto against a permit that has been in place for three years, approved by another agency, where EPA was engaged in that permit process and did not veto it at an opportune time," Sweeney said.

One issue that is likely to come up tomorrow is whether EPA has, in fact, vetoed such a permit before. Industry contended that the veto is unprecedented, and EPA said as much when it initially issued the decision.

But in court documents filed to the D.C. Circuit, EPA claimed it had vetoed existing permits under Section 404 authority twice before: in 1981 when it blocked North Miami, Fla., from filling wetlands with garbage to protect Biscayne Bay, and in 1992 when it vetoed dumping fill material in the construction of a reservoir in James City County, Va. EPA said that decision was later upheld by the Richmond, Va.-based 4th U.S. Circuit Court of Appeals.

The agency said it has "historically exhibited great restraint" in using the retroactive veto authority, noting that it has only done so in these three instances.

Environmentalists say that authority must be respected by the court.

Earthjustice attorney Emma Cheuse, who has been active in the case in defense of EPA, said that EPA's ability to veto permits, even after they are issued, is a tool to help protect communities from "unbearable amounts of destruction and pollution."

"EPA exercises its authority to veto sparingly, the record shows," Cheuse said in an interview. "This particular case shows exactly why Congress gave EPA the ability to protect waters in this unique circumstance."

Industry, however, maintains that the Spruce veto is unique.

"Allowing EPA perpetual and unrestricted license to modify a permit after its issuance -- even when the agency authorized to modify the permit has concluded there are no grounds to justify doing so -- would destroy the certainty that the permit is intended to provide and upset Congress's allocation of regulatory authority among the Corps, the States and EPA," Arch attorneys wrote in court documents. "Congress did not give EPA such unbridled power."

Moreover, concern about EPA retroactively acting on permits has arisen in a broad swath of industry -- from the U.S. Chamber of Commerce to the American Farm Bureau Federation. They worry that if EPA is victorious in the case, all issued Section 404 permits could be at risk.

Sheldon Gilbert of the U.S. Chamber said the initial veto "was a huge shock to pretty much the entire regulated community."

"Industry has not seen this type of conduct before," he said.

Don Parrish of the Farm Bureau added: "If EPA can veto this particular permit, when the owners were in compliance, they can try to use this in a lot of other places. If they can do it to the coal mining industry, they can do it to the livestock industry, the protein industry, anything else."

The three-judge panel tomorrow will consist of Judges Thomas Griffith, Karen Henderson and Brett Kavanaugh. All were appointed by Republican presidents, and Kavanaugh in particular has been critical of EPA in the past.

Gilbert wouldn't handicap which way the court may lean in the case but said he expects aggressive questioning of both sides.

"This is a bench that is really going to dig into the record," he said. "Both sides should expect to be grilled."

Whether EPA wins or loses, the case could end up in the Supreme Court, said John Iani, former administrator of the EPA Region 10 office in Seattle under President George W. Bush and now a Seattle-based lawyer.

Also pending in the D.C. Circuit is a case by the National Mining Association and several states against EPA over the agency's increased oversight of Appalachian mountaintop-removal mining projects.

Beyond coal mining, developers of the potential Pebble LP gold and copper mine in Alaska are watching the litigation closely. EPA has defended its ability not only to retroactively veto an Army Corps permit, but also to pre-emptively veto before permits are issued.

"Every case that decides whether and how EPA can protect clean water is an important case," Cheuse said. "It's about EPA's ability to do its job to protect waters, communities, whenever it realizes that environmental harm is at stake."

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