Lawsuits come and go, but debate over EPA veto rages on

A legendary Senate environmentalist, Maine Democrat Edmund Muskie, staked out the reach of U.S. EPA regulatory authority during the 1972 debate over the Clean Water Act.

At issue: Should it be EPA or the Army Corps of Engineers that gets the final say on permits for development that would destroy wetlands or dump debris into waterways?

On Oct. 18, 1972, the day the landmark legislation became law over President Nixon's veto, Muskie came down solidly for EPA in extended remarks published in the Congressional Record. "[P]rior to the issuance of any permit to dispose of spoil," he said, "the Administrator must determine that the material to be disposed of will not adversely affect municipal water supplies, shellfish beds and fishery areas. Should the Administrator so determine, no permit may issue."

Muskie's statement lives on in a legal and political fight that's been raging for more than 40 years over what's now known as Section 404(c) of the Clean Water Act. Environmentalists, industry groups, government officials and judges have spun the late senator's words to justify the scope of EPA's authority to veto Army Corps permits for a wide range of projects -- from solid waste landfills and coal mines to reservoirs and flood control projects.

EPA has vetoed 13 projects in 42 years, but each one has packed a punch. Most recently, the agency used it to squash what would have been one of the largest coal strip mines in West Virginia. It is also playing a central role in a fight over the proposed development of a massive copper and gold mine in Alaska's Bristol Bay watershed.

U.S. District Court Judge Amy Berman Jackson in the District of Columbia cited Muskie when she ruled in 2012 that EPA's retroactive veto of the West Virginia strip mine, Arch Coal Inc.'s Spruce No. 1 project, was illegal. Berman Jackson wrote that Muskie saying "prior to the issuance of a permit" meant EPA couldn't veto a permit after it was approved. EPA vetoed the Spruce permit in 2011, four years after the corps issued it.

Arch Coal also cited Muskie it its Spruce No. 1 briefs and reminded the court that Congress gave the Army Corps, not EPA, authority to issue dredge-and-fill permits. Lawmakers, the company said, rejected a version of the Clean Water Act that would have treated dredged material, as it did industrial sewage, and recognized the corps' expertise in such matters, the company's attorneys wrote in briefs.

But EPA argued that Muskie's statement "does not imply a prohibition on post-permit action," adding that a single statement from a senator, albeit the legislation's main backer, should not outweigh the plain language of the law. And a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit agreed with the agency.

The law, the judges wrote, lets EPA veto or withdraw corps permit specifications or disposal areas "whenever" the administrator determined.

Former U.S. Solicitor General Paul Clement also quoted Muskie in saying the Clean Water Act would bring "finality" to permitting when petitioning the Supreme Court on Arch's behalf to take up the case. But this week justices turned down a chance to review the Spruce No. 1 case. So if industry wants to overturn EPA's decision, it will likely have to go through Congress.

"It's huge," said Patrick Parenteau, professor at Vermont Law School, of the circuit court's decision. "I think those three judges said this is a plain text case. When the statute is as clear as this one is, that's sort of the end of the story."


To be sure, pro-coal and pro-mining lawmakers aren't ready to close the book. They have either introduced legislation or are in the process of writing a bill to overturn the appeals court ruling and also prevent EPA from pre-emptively vetoing other projects -- notably, the Pebble project in southwestern Alaska.

During its time in office, the Obama administration has broken ground with a retroactive Clean Water Act veto and may do so with a pre-emptive one -- both against mining operations.

EPA is in talks with Pebble developers, the corps and Alaska regulators to determine whether the agency wants to go the veto route in Alaska. The company has yet to submit a permit application.

Rep. Ken Calvert (R-Calif.), chairman of the House Appropriations Committee's environment subpanel, said during a hearing yesterday that EPA's actions make it "clear the administration is not serious about creating jobs."

Administrator Gina McCarthy cited the uniqueness of the Pebble deposit and Bristol Bay's natural resources. "I think it was appropriate to do that," she said about beginning an evaluation.

Impact on Pebble

Both sides of the Pebble debate paid close attention to the Spruce mine fight. The Supreme Court opting not to take that case could be seen as a blow to Pebble because it bolstered a broad interpretation of EPA's veto power and the timing for exercising it.

In Parenteau's words, the judges concluded: "Whenever is whenever."

Given how unlikely it is that a bill addressing the issue will be passed by a divided Congress, Pebble CEO Thomas Collier, a former Steptoe & Johnson LLP attorney, recently floated another argument against a pre-emptive veto: Litigation is almost a certainty in the event of a veto.

Collier parsed Section 404 beyond the "whenever" language and highlighted segments suggesting EPA's veto power applies only to areas where the Army Corps has made some sort of determination or fill "specification."

Section 404(a) says the corps "may issue permits, after notice and opportunity for public hearings for the discharge of dredged or fill material into the navigable waters at specified disposal sites," he said.

Then, a few lines later, Section 404(c) says, "The [EPA] Administrator is authorized to prohibit the specification (including the withdrawal of specification) of any defined area as a disposal site."

Collier warned EPA in a recent letter: "We believe that EPA lacks statutory authority to initiate the Section 404(c) veto process for the proposed Pebble Mine Project, for which the Corps has made no such specification."

He added, "Congress only granted EPA authority to veto permits or permit applications for specified disposal sites under Section 404(c), not to set aside large tracts of land in advance of any permit application."

But Natural Resources Defense Council attorney Joel Reynolds said Collier doesn't have a strong case.

"There is no requirement that this defined area must first have been the subject of a permit application, and, again, the use of the term 'whenever' is an insurmountable obstacle," Reynolds said.

Parenteau went beyond the Clean Water Act text in questioning Collier's argument. He said EPA has traditionally interpreted the law as giving the agency the authority "to advance-identify areas that are not suitable for disposal."

"You have a very long-standing consistent agency interpretation." he said. "It's not by rule. It's clearly been their official interpretation."

And Parenteau added that courts give agencies a wide berth in making such interpretations. "It only has to be a permissible interpretation," he said. "What the company is saying is a possible interpretation but is not the one EPA adopted."

He added that Pebble has already identified a general area for its dredge-and-fill activities. After all, he said, the company knows where it wants to mine. So EPA can point to that or certain areas within the Bristol Bay watershed as its disposal site.

Parenteau asked, "Why isn't that a permissible interpretation? That's the only thing the court is going to want to know."

Section 404 precedent

EPA's McCarthy has addressed concerns about the legality of her agency's actions. She tried to make the case that, contrary to conventional wisdom, pre-emptive or retroactive vetoes are not unprecedented.

"I don't think you want to think of this as any trend," McCarthy told lawmakers yesterday, noting the few times EPA has used its veto power. Still, the agency contends it has done so before, during and after the permitting process and can do so again.

When defending the legality of the Spruce retroactive veto, EPA said it's twice used its post-permit authority to block existing corps approvals. The first, in 1981, halted a trash dump at the edge of Biscayne Bay in North Miami, Fla.

EPA said several million cubic yards of solid waste would be dumped from the Munisport landfill into the bay and its wetlands.

But Arch said the North Miami case didn't count because the veto was in response to an application to modify a permit. Therefore, the company argued, there was no retroactive veto.

The second example of a retroactive veto, as EPA described it in court documents, was in 1988 to stop development of a reservoir in Ware Creek in James City County, Va.

The agency initially made its decision during permitting for the reservoir. But a federal judge and then the 4th U.S. Circuit Court of Appeals ordered the corps to issue the permit anyway because, the judges said, EPA hadn't made a convincing case in arguing that the county had alternatives to the project.

After the corps issued the permit, EPA vetoed the project again. And the second time, with the agency relying on environmental arguments, the 4th Circuit ratified EPA's action in 1993. The Supreme Court declined to take up the matter.

Judges deciding the case didn't rule on the timing of EPA's veto. So when EPA recently suggested the litigation upheld the notion of retroactive vetoes, Arch Coal attorneys balked.

"The Fourth Circuit held no such thing -- it never even discussed the issue. That, no doubt, is why EPA made no such argument to the district court," they wrote.

In defending the legality of a possible pre-emptive veto for Pebble, EPA cited another Florida case from the late 1980s.

At issue were three sites comprising more than 400 acres in the east Everglades. Two tracts had permit applications pending; the third didn't.

"I conclude that the [three Everglades tracts] provide important wildlife habitat which would be largely destroyed if the sites are rockplowed as proposed," acting EPA water chief Rebecca Hanmer wrote in 1988.

Collier rejected the case as an example of a pre-emptive veto because owners of two sites had applied for permits and all were related.

He said in a recent interview, "They have never vetoed a significant project before a permit has been filed."

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