Supreme Court Establishes Boundaries Between Wetlands and Pollution Discharge Programs Under the Clean Water Act

The Supreme Court issued its much anticipated decision this week addressing the jurisdictional boundaries between the U.S. Army Corps of Engineers ("Corps") and U.S. Environmental Protection Agency ("EPA") in permitting activities that may constitute both a wetlands fill and a pollution discharge under the Clean Water Act ("CWA"). 

In Coeur Alaska, Inc. v. Southeast Alaska Conservation Council, Nos. 07-984 and 07-990 (June 22, 2009), the Court held that the Corps properly exercised its wetlands permitting jurisdiction where the relevant activity—here, a mine slurry discharge to a navigable lake—met the Corps' regulatory definition of wetlands fill material and was therefore exempt from regulation by EPA under the National Pollution Discharge Elimination System ("NPDES") program.  The decision provides greater clarity for entities engaged in potentially "mixed" discharge activities but may foreshadow greater EPA involvement in reviewing Corps wetland permitting decisions.

The Coeur case pitted two potentially conflicting CWA permitting regimes, administered separately by the Corps and EPA, against one another.  The first, Section 404, provides the Corps authority to permit the discharge of "dredged or fill material" to jurisdictional waters.  The second, Section 402, provides EPA (and, where approved, certain States) authority to issue NPDES permits for the "discharge of any pollutant" to those same waters.  Both permitting regimes provide for the imposition of terms and conditions to protect the environment and human health, but the NPDES program typically includes far more involved effluent limitations or performance standards and corresponding treatment requirements.  The primary question posed in Coeur is which agency possesses permitting authority where the relevant discharge constitutes both a fill activity and the discharge of a pollutant potentially subject to both permitting programs.

The case arose from Coeur Alaska, Inc.'s proposal to revive the dormant Kensington Gold Mine in southeast Alaska through use of a froth-flotation milling process.  The proposed mine would discharge its tailings slurry from that mill process to a jurisdictional 23-acre lake, raising the bottom elevation by 50 feet and eliminating all fish and aquatic habitat during the 10 to 15 year operation of the mine.  Through the regulatory permitting process, the company received two permits under the CWA—a wetlands permit issued by the Corps for the slurry discharge to the lake (which included reclamation requirements) and an NPDES permit issued by EPA for the subsequent discharge of water from the lake to an adjoining river (which set discharge limits and required active treatment). 

Following permit issuance, several environmental organizations challenged the Corps' decision to issue a wetland permit, arguing that the tailings discharge should have been subject to an NPDES permit, particularly in light of EPA's new source performance standard specifically addressing wastewater discharges from froth-flotation mills.  Coeur Alaska and the State of Alaska intervened in the case on behalf of the Corps.  Following a district court ruling in favor of the Corps, the U.S. Court of Appeals for the Ninth Circuit reversed the Corps' permitting decision, holding that EPA's more specific performance standard, rather than the Corps' regulatory definition of "fill material," governed issuance of the permit.

The Supreme Court reversed the Ninth Circuit's decision and held in favor of the Corps.  The Court's 6-3 decision, authored by Justice Kennedy, rests on two inter-related holdings.

First, the Court held that Section 402 expressly limits the application of that section where permits are otherwise issued under Section 404.  Thus, in the Court's view, Section 402 actually forbids EPA from exercising NPDES permitting authority where the Corps properly exercises its authority to issue a "dredge and fill" permit pursuant to Section 404.  Because the Corps defines the term "fill material" to mean any material that has the effect of "[c]hanging the bottom elevation" of a water and specifically includes slurry, tailings or similar mining-related materials, the Court held that the Corps properly applied its wetlands permitting jurisdiction to Coeur Alaska's discharge.  The Court also recognized that EPA possesses veto authority over Corps permitting decisions and, in this instance, did not disagree with the Corps' decision.

Second, with respect to whether EPA's performance standard for froth flotation mills should apply to discharges regulated under Section 404, the Court held that the CWA was ambiguous.  Lacking clear statutory language, the Court turned to the Corps and EPA's regulations and guidance.  While the Court did not find a definitive answer in the agencies' regulations, it provided deference to an internal memorandum written by EPA's Director of the Office of Wetlands, Oceans and Watershed concluding that the regulatory regime applicable under Section 402—including EPA's performance standards—did not apply to the placement of mine tailings in this particular instance.  The Court held that EPA's interpretation was consistent with the statute, preserved a role for EPA's performance standard (which still applies to mine discharges beyond closed water bodies) and retained the Corps' permitting authority and discretion to protect the environment in issuing wetlands permits.

The Court's decision in Coeur establishes a clear line of demarcation between the Corps and EPA's respective permitting jurisdiction under the wetlands and NPDES programs.  While the particular facts of this case limit application of the holding to mine discharges, the Court's rationale may well apply in other instances where the discharge of fill material contains pollutants that are otherwise subject to an effluent limitation or performance standard.  The Court's decision also appears to take solace in the collective position taken by both permitting agencies here, which may presage greater EPA involvement and oversight in future Corps permitting decisions under Section 404.