The U.S. Supreme Court Upholds the Corps’ Exclusive Role for the Issuance of Fill Permits Under the Clean Water Act
July 1, 2009
Lawrence R. "Larry" Liebesman- Washington
In a 6-3 decision on June 22, 2009, written by Justice Kennedy, the U.S. Supreme Court reversed the decision of the U.S. Court of Appeals for the Ninth Circuit holding that slurry waste discharged from a gold mining operation into a lake in Alaska was properly regulated as fill material by the United States Army Corps of Engineers (“the Corps”) under section 404 of the Clean Water Act (CWA or “the Act”) and not by Environmental Protection Agency (EPA) under section 402 of the Act. Coeur Alaska Inc. v. Southeast Alaska Conservation Council, U.S., No. 07-984, 6/22/09.
In making this decision, the Court clearly delineated the respective authorities of the Corps and EPA under the two distinct regulatory schemes of the Act. As the final environmental ruling of the Court this term, this decision addressed the permitting schemes established by Congress in 1972 whereby the Corps issues permits under § 404(a) for the “discharge of dredged or fill” material into “waters of the United States” and EPA administers the § 402 permitting program, largely through delegation to states, for the discharge of other pollutants from point sources, applying “effluent limitations” including new source performance standards (NSPS) under § 306 of the Act. In addition, this decision clears up confusion surrounding whether effluent containing some solid materials that are subject to EPA’s guidelines should be regulated under the Corps’ § 404 permit program if the discharge meets the Corps’ and EPA’s definition of “fill material.” This decision will also provide guidance to the regulated community for the disposal of other kinds of waste materials.
Background
The case centered on Coeur Alaska’s plans to re-open the Kensington Gold Mine near Juneau, Alaska. The mine planned to use a technique known as “froth flotation” at its mill facility. Waste material from the mill, a mixture of crushed rock and water called slurry, would be discharged into Lower Slate Lake, a navigable water of the United States. Coeur Alaska applied for a discharge permit under § 404 of the CWA. The Corps processed the permit under § 404 because the material met the definition of fill material in both the Corps and EPA regulations. After extensive review, the Corps issued a § 404 permit finding that the use of Lower Slate Lake for disposal of the tailings was the “least environmentally damaging practicable” way to dispose of the slurry.
The Southeast Alaska Environmental Council (SEACC) brought suit against the Corps in the U.S. District Court for the District of Alaska arguing that the CWA § 404 permit was not “in accordance with law” because: (1) Coeur Alaska should have sought a CWA § 402 permit from the EPA instead of the § 404 permit from the Corps; and (2) the slurry discharge violates the EPA performance standards. Coeur Alaska and the state of Alaska intervened as defendants. The District Court ruled in favor of the defendants holding that the Corps was the exclusive permitting authority. The Court of Appeals for the Ninth Circuit reversed and ordered the District Court to vacate the Corps’ permit. The court concluded that because the plain language of the Act and prior agency statements demonstrated that the EPA new source performance standards governed discharges like those of Coeur Alaska, the company needed a § 402 permit for its slurry discharge and the proposed discharge was unlawful because it would violate the EPA new source performance standards under § 306.
The Supreme Court’s Decision
In granting review, the Supreme Court addressed two questions:
- whether the CWA gives authority to the Corps to issue a permit for discharge of slurry
- whether the Corps issued the Coeur Alaska permit in accordance with the law
As to the first question, the Court held that the Corps, not the EPA, was the proper agency to permit the slurry discharge. Section 404(a) of the CWA grants the Corps the power to issue permits for the discharge of fill material. At the same time, § 402 of the CWA grants the EPA authority to issue a permit for the discharge of any pollutant, except as provided in § 404. Therefore, § 402 forbids the EPA to issue permits for fill material falling under the Corps’ § 404 authority. Any ambiguity on this point should be resolved by the EPA’s regulations, which provide that discharges of fill material regulated under § 404 do not require EPA § 402 permits. Since the Corps and EPA together defined “fill material” to include “slurry or similar mining-related materials” having the “effect of … [c]hanging the bottom elevation of water” and that slurry is defined by regulation as “fill material,” the Court concluded that Coeur Alaska properly obtained its permit from the Corps under § 404.
With regard to the second question, the Court held that the slurry discharge under the Corps’ § 404 permit was lawful because the EPA new source performance standards for froth-flotation gold mines did not apply to the discharge of slurry into the lake. SEACC contended that Coeur Alaska’s slurry discharge, 30 percent of which is solid waste, was unlawful under CWA § 306, which prohibits “any owner of any new source to operate such source in violation of any standard of performance applicable to such source.” The Court noted that this is a very strict standard and would prohibit all discharge of process wastewater (which includes solid waste) from the mine if applied here. The Court noted that the CWA is unclear on the question of whether § 306 applies to discharges of fill material regulated under § 404. While § 306 provides that a discharge which violates an EPA new source performance standard is unlawful, without an exception for fill material, § 404 grants the Corps authority to permit the discharge of fill material, without reference to § 306. Therefore, the Court noted that Congress has not “directly spoken” to the “precise question” at issue, citing Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. In addition, the Court noted that the agency regulations failed to resolve the statutory ambiguity in a reasonable manner and thus were not entitled to deference. The Court also noted that EPA new source performance standards for such wastes contain no exception for fill material and the agencies’ joint regulation contains no exception for slurry regulated under the EPA new source performance standards. While the parties pointed to additional regulations, the Court concluded that none of these provisions offered a clear basis for reconciliation.
Significantly, the Court then relied on an internal EPA guidance memo to resolve the ambiguity of the CWA and agency regulations. The Court quoted extensively from the memo written by Diane Regas, then the Director of EPA’s Office of Wetlands, Oceans and Watersheds (the “Regas Memorandum” or the “memo”). The Regas Memorandum explained that the EPA performance standards apply only to the discharge of water from the lake into the downstream creek – not to the initial discharge of slurry into the lake. While the Court noted that the memo was not subject to sufficiently formal procedures and thus does not warrant Chevron deference, it nevertheless was not “plainly erroneous or inconsistent with the regulations,” citing to the Court’s decision in Auer v. Robbins. The Supreme Court then explained that deference to the Regas Memorandum was appropriate because the memo:
- confines its own scope to closed bodies of water, like the Lower Slate Lake, thereby preserving a role for the performance standards
- guards against the possibility of evasion of the NSPS
- employs the Corps’ expertise in evaluating the effects of fill material on the aquatic environment
- does not allow toxic compounds to be discharged into navigable waters
- reconciles §§ 306, 402 and 404, and the regulations implementing them, better than any of the parties’ alternatives
The Dissent
Justice Ruth Bader Ginsburg, joined by Justices Stevens and Souter, argued in dissent that § 404 does not provide an exception to the new source performance requirements. Section 306 mandates that any owner of any new source must operate the source in accordance with the applicable standards of performance. The applicable standard of performance here requires that there be no discharge of process wastewater to navigable waters from mills that use the froth-flotation process for mining gold. These requirements are without qualification. Section 404, on the other hand, states that the Corps “may issue permits” for the discharge of “dredged or fill material.” Ginsburg argued that this does not create an exception to § 306’s plain command. For Ginsburg, a clear rule results by simply reading the two provisions in harmony with each other: discharges governed by EPA performance standards are subject to EPA’s administration and must receive permits under § 402 and not § 404. Ginsburg believes that this reading accords with the CWA’s structure and objectives, whereas the majority’s interpretation leads to a situation where prohibited pollutant discharges may become authorized simply by increasing the amount of discharges to a scale sufficient to change water body elevations.
Conclusion
The split of permitting authority between the Corps and EPA under the Clean Water Act has been a source of tension and confusion since the law was enacted in 1972. The confusion is especially evident for industries subject to technical EPA performance standards intended to protect water quality. In fact, the Court noted that EPA has performance standards for roughly 30 different chemicals covering many processes from the manufacture of pharmaceuticals to the manufacturing of cement. However, the Court also noted that the Corps has traditionally regulated discharges that result in filling of water bodies subject to other EPA guidelines designed to protect aquatic systems from the impacts of filling. The Court’s decision recognizes that the Corps’ and EPA’s definition of “fill material” was a reasonable interpretation of the Act to provide clear guidance as to which regulatory standards must be met under the Clean Water Act. Companies regulated under these performance standards now have clear criteria as they face the complex Clean Water Act permit process.
For more information, contact:
Larry Liebesman
202.419.2477 | lawrence.liebesman@hklaw.com
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