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Supreme Court Gives Deference to EPA and Corps of Engineers Regarding "Fill Material" Under Clean Water Act

In Couer Alaska, Inc. v. Southeast Alaska Conserv. Council, No. 07-984. 557 US ___ (June 22, 2009), the Supreme Court examined the Clean Water Act (CWA) and its differentiation of permitting authorities depending on the classification of a pollutant as “fill material.” Ultimately, the Court's ruling gives deference to the Environmental Protection Agency (EPA) and the Army Corps of Engineers (the "Corps") regarding their definition of "fill material" under the Clean Water Act (the "CWA").  The Court's decision reverses and remands a Ninth Circuit decision that overturned a summary judgment granted by the District Court originally allowing a mining company to discharge mining material or “slurry” directly into a nearby lake under the company's current permits with the EPA and the Corps.

The CWA classifies crushed rock normally found in “slurry” as a pollutant, which pollutants are forbidden from being discharged into navigable waters unless in compliance with the CWA. See 33 U.S.C. §§1311(a); 1362(6). The CWA requires a permit from the EPA in order to discharge pollutants, however the CWA allows the Corps to issue permits for “dredged or fill material" under 404(a). See 33 U.S.C. § 1344(a). The Corps and EPA have together defined “fill material” to mean any “material [that] has the affect of  . . . [c]hanging the bottom elevation” of water, and the “discharge of fill material to include “placement of . . . slurry, or tailings or similar mining related materials." 40 CFR § 232.2. Couer Alaska was granted a Sec. 404(a) permit by the Corps to pump slurry into the nearby lake that would alter the bottom elevation of the lake after the Corps examined the environmental consequences using EPA guidelines for 404(a) permits.

The EPA also issued a Sec. 402 NPDES permit as well covering the discharge from the lake to the downstream creek. The authority to issue the NPDES permit came from the “new source performance standard” regulation that was promulgated under the CWA § 306(b). This allowed the EPA to restrict discharges and prohibit any discharge of process wastewater, which includes solid waste, from new froth-flotation gold mines like Couer Alaska’s. Therefore, under the permit, any water from the lake to the downstream creek must be purified by reverse osmosis and monitored heavily.

The Southeast Alaska Conservancy Council (SEACC), alleged that the Corps permit was unlawful, as the EPA was supposed to be the appropriate permitting authority and that the discharge itself is unlawful in light of the “new source performance standard” as it applies to the discharge of slurry into the lake since the EPA standard covers froth-flotation gold mines.

The Court held that the proper permitting authority regarding the slurry was the Corps as Section 402 of the CWA creates a carve-out for Corps permitting in Section 404. The EPA is given the ability to draft guidelines under Sec. 404, which were followed by the Corps, as well as to exercise veto power over the permit in certain cases, which EPA did not exercise. Also, the Court declined to read Sec. 306(e)’s “new source performance standard” as an implicit exception for to the Corps’ power to permit under Sec. 404.  The Court reasoned that Congress did not intend to burden the industry so heavily as each section 404 permit could be subject to “one of the many hundreds” performance standards issued by the EPA.

Secondly, the Court found that the Corps did issue the permit in accordance with law. In line with the rationale of the first holding, the Court held that EPA performance standards and CWA § 306(e) do not apply to discharges of fill material. The Court began its opinion using a Chevron-type analysis and found that Congress has not “directly spoken” to the “precise question” regarding application of the performance standards to discharges of fill material. However, the Court also found that regulations issued by EPA did not clear up any ambiguity. With no direct legislative statement and ambiguous regulations, the Court based its rationale on an internal EPA memorandum in which the agency explained its performance standards do not apply to the discharge of fill materials. Even though the Court determined that this internal memorandum was not entitled to the level of deference established in the Chevron case, the Court stated it deserved some, lesser level of deference and accepted the internal memorandum as a valid interpretation as it was not “ plainly erroneous or inconsistent with the regulation[s].” US v. Mead, 533 U.S. 218, 234-38 (2001); Auer v. Robbins, 519 U.S. 452, 461 (1991).

In determining that the statute and regulations did not speak directly on the precise question, the Court found that there was a relative tension in the permitting and performance standards located in the CWA and applicable regulations. The performance standard under §306(e) would clearly cover slurry under a section 402 permit issued by the EPA.  However, section 404 provides the Corps blanket authority to issue permits for discharge of fill materials without any mention of section 306.  The Court found that an internal agency document from the Director of the EPA’s Office of Wetlands, Oceans and Watersheds to the Regional Director in charge of the mine and lake which established EPA's position that EPA standards under §306(e) did not apply, should be provided some deference by the Court even though it was not developed using more formal rulemaking procedures.

The Court gave to deference to the memorandum because it is an agency document interpreting the agency's own regulatory scheme and it was not "plainly erroneous or inconsistent with the regulation[s]." The Court found the memorandum not to be "plainly erroneous" based on five factors: (1) the memorandum preserves a role for the performance standard; (2) EPA acknowledges that the discharger is not attempting to evade the EPA’s performance standard; (3) the memorandum’s interpretation preserves the Corps’ authority to determine whether the discharge is in the public interest; (4) the memorandum does not allow toxic pollutants to enter navigable waters, and (5) the memorandum is a sensible and rational construction of §§ 306, 402, and 404, where the parties are not. Thereby, the Court “accorded deference to the agencies’ reasonable decision to continue their prior practice.”

Craig Raysor, June 23, 2009