March 01, 2015

D.C. Circuit Rules on Mining Guidances

Erin Flannery Keith

In National Mining Ass’n v. McCarthy, No. 12-5310 (D.C. Cir. July 11, 2014), the D.C. Circuit held that a memorandum of understanding (MOU) and a guidance related to Appalachian surface coal mining were not final agency actions ripe for review. The D.C. Circuit reversed the district court’s grant of summary judgment in favor of plaintiffs, and remanded to the district court to grant judgment for the U.S. Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Corps) in the matter of the MOU and dismiss plaintiffs’ challenge to the guidance document.

Surface coal mining occurs in West Virginia, Pennsylvania, Kentucky, Virginia, Ohio, and Tennessee. Mining operators remove soil and rock between the coal seam and the surface, expose the coal seam, and extract coal. Overburden—the non-coal bearing soil and rock—is placed into valley fills, burying streams and wetlands with sediment and “fundamentally alter[ing] the biological communities and the biogeochemical cycling throughout the river network.” E.S. Bernhardt, et al., The Environmental Costs of Mountaintop Mining Valley Fill Operations for Aquatic Ecosystems of the Central Appalachians, 1223 Ann. N.Y. Acad. Sci. 37, 42 (2011). High levels of dissolved solid ions increase water’s conductivity—a measure of water’s ability to carry electricity. Waters with high conductivity and salinity stress aquatic organisms by impeding their ability to regulate their bodies’ osmotic fluid pressure. W.L. McCulloch, et al., Characterization, Identification, and Confirmation of Total Dissolved Solids as Effluent Toxicants, 2 Environmental Toxicology and Risk Assessment 213−227 (1993).

Surface coal mining requires authorization under the Surface Mining Control and Reclamation Act (SMCRA) (see 30 U.S.C. §§ 1252, 1256) and two Clean Water Act (CWA) permits for discharges into waters of the United States. SMCRA permits specify the methods by which and area in which an operator may mine, and require an inspection and reclamation plan. All Appalachian coal mining states except Tennessee are authorized to issue SMCRA permits.

CWA section 301(a) prohibits any discharge of a pollutant by any person into waters of the United States, unless the discharge complies with the CWA’s permitting and water quality standard requirements. The CWA section 402 National Pollutant Discharge Elimination System (NPDES) program regulates the discharge of pollutants from point sources to waters of the United States. Section 402 permits are issued by the EPA or by one of the forty-six states and one territory authorized to administer the NPDES program. All Appalachian coal mining states issue NPDES permits. EPA retains oversight authority for state NPDES programs.

CWA Section 404 provides that the Corps may issue permits for discharges of dredged or fill material into waters of the United States at approved disposal sites subject to other section 404 requirements. Pursuant to section 404(b), EPA and the Corps jointly developed guidelines to ensure that proposed permits include the least environmentally damaging practicable alternative. The CWA also permits EPA to withdraw its approval of disposal sites designated in section 404 permits. 33 U.S.C. § 1344(c).

With an increasing number and backlog of CWA permit applications for surface coal mining operations, the Corps and EPA agreed in 2009 to streamline permit review and minimize mining’s environmental impacts. The Enhanced Coordination Procedure (ECP) was described in the “Memorandum of Understanding Among the U.S. Department of the Army, U.S. Department of the Interior, and the U.S. Environmental Protection Agency Implementing the Interagency Action Plan on Appalachian Surface Coal Mining” (June 11, 2009). In the ECP, the agencies agreed to “immediately implement enhanced coordination procedures applicable to the [CWA] review of Section 404 permit applications for Appalachian surface coal mining” and “ensure more timely, consistent, transparent, and environmentally effective review of permit applications under existing law and regulations.” ECP at 4.

On July 21, 2011, EPA issued a “Final Guidance on Appalachian Surface Coal Mining” (Final Guidance). The Final Guidance cited scientific studies demonstrating that surface coal mining operations’ discharges elevate conductivity levels in Appalachian streams, and could have reasonable potential to impact aquatic life in the streams adversely. The Final Guidance stated that regional EPA reviewers should determine whether state Section 402 permits meet the studies’ recommended conductivity levels.

The National Mining Association (NMA), coal mining companies, and the states of Kentucky and West Virginia challenged the ECP and the Final Guidance in federal district court. The plaintiffs argued that the documents exceeded CWA statutory authority and that the Final Guidance was an improperly promulgated legislative rule and final agency action. The district court agreed and invalidated the ECP. NMA v. Jackson, et al., 816 F. Supp. 2d 37 (D.D.C. 2011). Soon thereafter, the district court held that the Final Guidance’s conductivity statements were “more than a mere suggestion” and invalidated the Final Guidance by saying that “EPA has overstepped its statutory authority under the CWA and the SMCRA, and infringed on the authority afforded state regulators by those statutes.” NMA v. Jackson, et al., 880 F. Supp. 2d 119 (D.D.C. 2012). The U.S. Government appealed.

In a July 2014 decision, the D.C. Circuit considered whether the ECP violated the CWA, whether the ECP was a legislative rule promulgated without notice and comment, and whether the Final Guidance was reviewable final agency action.

First, the court addressed whether the ECP violated the CWA by allowing EPA’s involvement in Section 404 permitting processes beyond the stages stated in the statute. The CWA offers several ways for EPA to participate in the Corps’ Section 404 permitting process. Under Section 404(b), EPA and the Corps jointly developed the “404(b)(1) Guidelines” to examine whether a Section 404 permit proposal reflects the least environmentally damaging practicable alternative. 40 C.F.R. 230. Additionally, under CWA Section 404(c), EPA may prohibit or withdraw its specification of an area for use as a dredge and fill discharge site if the discharge would “have an unacceptable adverse effect . . . on municipal water supplies . . . wildlife, or recreational areas.” The CWA also authorizes EPA and the Corps to develop procedures for elevating policy issues and preventing delays under Section 404(q).

NMA argued that these named provisions are the only ways in which EPA is authorized to participate in the Corps’ section 404 permitting proceedings, and that EPA was also improperly interfering with the Department of the Interior’s (DOI) SMCRA permitting process by consulting with state SMCRA programs on Best Management Practices. The Government argued that Congress did not intend to restrict EPA’s ability to interact with the Corps at other times during the Section 404 permitting proceedings or to curtail opportunities for EPA and DOI to consult.

The D.C. Circuit agreed. Rather than changing the substantive requirements or authorizations for interagency consultation during the Section 404 permitting process, the court said that the ECP clarified existing responsibilities: “The Corps still makes the ultimate decision whether to approve the permit. EPA still makes the decisions on the disposal sites.” NMA v. McCarthy, No. 12-5310, slip op. at 9. The court said that when the agencies committed to each other in the ECP that they would focus on certain Section 404 permits for Appalachian surface coal mining operations, the ECP did not change their respective substantive CWA authorities. The opinion’s tone in the discussion of the “consultation and coordination [that] occurs in the many disparate and far-flung parts of the Executive behemoth” suggests that the court favors this approach. Id. at 9, 10.

Next, the court considered whether the MOU describing the ECP was a legislative rule promulgated without notice and comment. The plaintiffs argued that because the ECP had the force and effect of law by giving EPA more authority than the CWA granted, it was an improperly promulgated legislative rule. Because the D.C. Circuit found that the ECP did not substantively change EPA’s authority, the court also said that the ECP was an interpretive statement of procedure, not a legislative rule.

Finally, the court considered whether the Final Guidance exceeded EPA’s authority and whether it was a reviewable final agency action under the APA. NMA argued on appeal that the Final Guidance—indeed titled “Final” by the agencies—was a final legislative rule that imposed legal obligations on the EPA regional reviewers to implement conductivity levels that had not otherwise gone through the CWA’s water quality standards development process. EPA argued that the Final Guidance, like other routine guidance documents issued by other federal agencies, was a general policy statement with optional, caveated instructions for regional staff to examine state NPDES permits to determine whether the permits included the studies’ recommended conductivity levels. The court stated that the “most important factor concerns the actual legal effect (or lack thereof) of the agency action in question on regulated entities.” Slip op. at 15. Even though the Final Guidance may have been the consummation of the agency decisionmaking process on how to consider conductivity in permits, the court agreed with EPA that the Final Guidance did “not tell regulated parties what they must do or may not do in order to avoid liability” and “imposes no obligations or prohibitions on regulated entities.” Id. at 15. The court looked to “the agency’s characterization of the Guidance.” Id. at 16. In part, the court was informed by the statements of counsel for the Government at oral argument that state CWA permitting authorities are “free to ignore” the Final Guidance. Oral Arg. at 12:19. “On its face, the Final Guidance disclaims any intent to require anyone to do anything or to prohibit anyone from doing anything.” Id. The court distinguished the mining Final Guidance from the guidance document in Appalachian Power Co. v. EPA, 208 F.3d 1015 (D.C. Cir. 2000), determining it was a legislative rule because it contained more commands and fewer caveats than the mining Final Guidance. Plaintiffs still have the right to challenge EPA’s application of the Final Guidance if they are adversely affected.

Because conductivity remains a critical environmental consideration for mountaintop mining discharges to Appalachian streams, EPA and the Corps will likely continue to rely on established permit review processes and the latest conductivity science to develop water quality criteria and issue permits that protect Appalachian stream water quality. The agencies stopped using the ECP after the district court invalidated it, but EPA continues to review the Corps’ mountaintop mining permits according to the 404(b)(1) Guidelines, maintains its ability to disapprove disposal specifications under 404(c), and may elevate issues under 404(q). If NPDES permitting authorities are “free to ignore” the Final Guidance, how can EPA object to state NPDES permits? The same tools remain: if EPA objects to an authorized state’s Section 402 NPDES permit, it would have to rely on the factors and procedures established in its regulations at 40 C.F.R. 123.44. EPA may make general and specific objections to a state’s NPDES proposed permit if the permit does not include regulatory requirements such as effluent limitations that ensure that the discharge will not cause or contribute to an excursion above any state water quality standard. A state may request that EPA hold a public hearing on the objection, after which EPA must notify the state that it either reaffirms the original objection, is modifying the terms of the objection, or withdrawing the objection. If EPA still objects, the state can resubmit a revised permit. If the revised permit does not satisfy the reasons for EPA’s objection, EPA may issue the permit itself. EPA, states, and stakeholders have an established process on which to rely for permit objections. Well-documented criteria and permitting decisions can better protect Appalachian water quality as aquatic scientists continue their cutting-edge research.

Erin Flannery Keith

Ms. Keith works in the Office of Wastewater Management at the U.S. Environmental Protection Agency and is a member of the editorial board of Natural Resources & Environment. The views expressed here are those of the author only and do not necessarily represent those of the United States or U.S. EPA.