EPA retrospectively veto’s a Corps permit, and it might just be OK.

Calm down, we can handle this:
EPA retrospectively vetos a Corps Permit after the fact.

This month the DC Circuit Court upheld the EPA’s jurisdictional authority to retrospectively veto a USACE 404 permit to fill waters covered by the CWA.

In simpler terms – the Corps gave their approval for a mining company to discharge into streams around their proposed mining operations and issued the required 404 permit under the CWA. But the EPA ended up concluding that, actually, the adverse effects were just too great and their permit should be revoked.

Without delving into the further details. of this headline, those in Mitigation Banking would see this to potentially bring even more uncertainty to an already complex and risk-heavy business. And could it be the first in a potential wave of other permits potentially revoked? Will they be vetoing more future permits now, too? If the EPA can indeed revoke a permit after it has been issued, that takes away some of the certainty – and benefit – of the 404 Permit.

But is that what it really means?

USACE approval is an integral part of the development project and if they can’t be sure that this clearance is solid, hesitation and reservation creeps in. Developments that purchase mitigation credits frequently involve many millions of dollars, so these decisions aren’t taken likely. If hesitation meant fewer projects, that could mean fewer credit sales. Oh no!

But, sensibly, many in the industry are waiting to hear a few more details before they reach this conclusion. No one is panicking, although Mr. Randy Wilgis, immediate past president of the National Mitigation Banking Association, does not underestimate the potential importance of this decision – if not for Mitigation Bankers themselves, then certainly for their clients and investors – and the potential uncertainty and hesitation it could foster. It’s something we should all be watching and following.

Indeed keep following and it would seem that the details of this decision will be found to bring strength – not uncertainty – to their business. And an event like this certainly gives one an inside into the complex balance of elements that go into doing Mitigation Banking in the USA.

And the facts are?

There are some great on-line resources to locate the details of this protracted legal process.

For example, this isn’t the first time the EPA has done vetoed a permit – it isn’t likely to be a signal of a new trend in enforcement. The EPA have had this authority under 404C of the CWA since written in 1972. This is the fourteenth time it’s been used, and the fourth time it has been done retrospectively (vetos can be used in the notification and approval processes too). Perhaps this is why it caught the EPA by some surprise when the legal case from the mining company came.

The mining company had the permit, but they hadn’t stated mining it. The original permit for mountain top mining that started this chain of events around 10 years ago triggered a raft of scientific studies, as the mines impacts just weren’t clear from the ecology they had at the time. It was only after the studies were finished, and the data understood – two years later – that the EPA saw the need to revisit and ultimately launch the review process that lead to the veto. Such a delay between permit and veto is concerning for some, yet new information seems to have forced the EPA into a difficult position. This is unlikely (though not impossible) with the vast majority of current and future permits. Again, the start of a trend seems unlikely.

And there is one more chapter to be concluded. The District Court that first heard the case has now been instructed to revisit the second part of the case not heard when they decided the EPA had stepped outside their jurisdiction.

They now must decide whether they used this authority capriciously and without the required judiciousness. The decision was theirs to make, but did they make the right one?

The True Positives: Oversight and Consistency

While this is revisited, let us Mitigation Bankers for now feel secure that the EPA had their authority re-affirmed. Understandably the EPA is ecstatic about this decision. No stranger to law suits, rightly or wrongly, the EPA are understandably pleased to be reassured their process and actions are as they intended.

And for Mitigation Bankers, it’s a reminder of the oversight in the industry – and that’s actually good thing for mitigation bankers to be able to reinforce they are part of a rigorous process.

Because in 2013, the Mitigation banking industry is perhaps older and wiser, having gained the confidence to educate those they interact with. Given a little industry maturity, uncertainty can be re-framed instead in to greater certainty: it’s proof of the regulatory oversight that gives the system its strengths. Buyers purchase credits for their strength in assuring what is being delivered. Enforcement is a necessity of this industry and Mitigation Bankers have been at the forefront of promoting this message since the very early days of the industry.

Of course, you might think the Corps might not quite equal the joy of the EPA at hearing this news. Does the ruling suggest they in-fact did not do their job correctly by issuing the permit in the first place?

It’s not to be speculated here but in the current push to increase consistency across districts and regions, especially relevant to Mitigation Banking’s even playing field, a reminder that their decisions have a second level of scrutiny will be another reminder of the value of strength in numbers of sorts – templates for decision making and documentation are valuable to assure Districts they have recourse when questioned. This is a timely reminder, if one was needed in some areas.

But unlikely to be a source of stress or shock with the USACE in general, given these ‘consistency’ wheels might already be in motion, with draft documents in Preparation by the USCAE (see EM blog on Jennifer Moyer’s NMBEC Presentation). Either way, this can only serve to re-enforce the current trend in coordination between Districts, and between Regional and Headquarters’ roles in oversight and regulation that the Mitigation Banking industry was talking about at their annual conference this month.

While others may continue to find uncertainty and regulatory panic in the story of this case, it’s likely the better Mitigation Bankers will rest easy and continue an informed vigilance to the many, many external factors they contemplate each year.

Is it possible to say that all this is, instead, a sign of strength in maturing Industry?

Stay tuned to hear official comment from agencies when they are available, and ongoing reaction as the District Court proceeds.

With Contribution from:

Plamer Hugh – EPA, Washington DC
Randy WIlgis – immediate NMBA past-President
Royal Gardner – Stetson University, Tampa FL
Jennifer Moyer – USACE, Washington DC
Terry McKenzie – Mitigation credit Marketing and sales, Houston TX
Ben Guillion – WRA, California
Steve Martin – USACE, Raleigh NC

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