By  Elizabeth E. Howard of Dunn Carney Allen Higgins & Tongue LLP

June 29, 2009

The Supreme Court issued a ruling Monday in Coeur Alaska, Inc. v. Southeast Alaska Conservation Council, holding that dredge and fill activities regulated by the Army Corps of Engineers (“Corps”) under § 404 of the Clean Water Act (“CWA”) do not require permits from the Environmental Protection Agency (“EPA”) under § 402 of the CWA.  The decision also held that the permit issued in the case was lawful, rejecting environmental groups’ interpretation of the relationship between Corps’ permits and EPA’s “new source performance standard.”

The case centered around the Corps’ approval and issuance of a permit to reopen the Kensington Cold Mine about 45 miles north of Juneau, Alaska.  The mining company sought to dispose of slurry (a mixture of crushed rock and water) by pumping it into a nearby lake, thereby raising the level of the lakebed.  The mining company applied for and received a § 404 permit from the Corps in 2005.  Under § 404 of the CWA, the Corps is authorized to issue permits for the dredge and fill of navigable waters.  The Corps’ permit allowed the mining company to pump slurry into the lake, and contained conditions for reclamation of the lake after the project was  completed.  In issuing the permit, the Corps found that the slurry material met the Corps’ regulatory definition of “fill material,” so it found that a dredge and fill permit was the appropriate regulatory mechanism for permitting the project.  The EPA also issued a § 402 permit for discharge from the lake into a downstream creek.  Section 402 regulates effluent discharges from point source pollution, and grants EPA the authority to “issue a permit for the discharge of any pollutant,” except as provided in § 404 of the CWA.  The EPA claimed authority to regulate the slurry discharge into the creek based on an EPA regulation issued pursuant to § 306 of the CWA, which sets “new source performance standards” restricting discharges from the type of gold mine at issue in this case.

An environmental group brought suit against the Corps, arguing that only the EPA should have issued a CWA permit in this case, and that the discharge was unlawful because it would violate the “new source performance standards.”  The district court decided the Corps, and not the EPA, should issue the permit, prompting the environmental groups to appeal the decision to the 9th Circuit.  The 9th Circuit held for the environmental groups, finding that the EPA’s “new source performance standards” and permit requirements apply to the discharges from the mine.  The Supreme Court took the case and reversed the 9th Circuit.  The Court held that the Corps that has the authority to determine whether to grant the mining company a permit, not the EPA.  The Court did note that the EPA has some authority in the Corps permitting process—it writes the Corps permitting guidelines and has a veto power over Corps’ permits.  However, the CWA and EPA’s own regulations exempt discharges of dredge or fill material from the requirement to obtain EPA permits under § 402.

The Court also discussed the relationship between Corps’ § 404 permits and regulations which govern “new source performance standards.”  The environmental groups argued that because the type of mine at issue in this case violates a “new source performance standard,” the § 404 permit granted was unlawful.  The court disagreed.  In deciding the question, the court looked at the statutory text of the CWA, the agencies’ regulations, and the EPA’s interpretation of those regulations.  After finding that the statute and regulations were ambiguous, the court looked to an internal memorandum issued by the EPA.  The memorandum found that “new source performance standards” don’t apply to § 404 permits.   The Court relied on the memorandum to support its decision.  The use of the memorandum by the Court is important as it shows increased deference to agency interpretations, even those that are not subject to the formal rulemaking process normally required to obtain judicial deference to an agency’s analysis of the law. 

Additionally, this case helped clarify the respective roles of the EPA and the Corps in the permitting process, and clarified the scope of a Corps’ permit.  The decision will make it easier for regulated industries to ensure they are following the correct regulatory process.  It also allows § 404 permits to be issued even if the activity does not comply with the “new source performance standards.”  If you have any questions or would like our assistance in complying with Clean Water Act, please contact Elizabeth Howard, member of the Environmental Group and author of this article. 

The foregoing is intended as general information, not an opinion or legal advice and does not create an attorney client relationship between the firm and any reader.