Marquette County Road Commission v. United States Environmental Protection Agency
Docket: File No. 2:15-CV-93
Court: District Court, W.D. Michigan; May 18, 2016; Federal District Court
Marquette County Road Commission (MCRC) has filed a lawsuit seeking declaratory and injunctive relief against the EPA, its Region V Administrator Susan Hedman, and the Army Corps of Engineers, invoking the Clean Water Act (CWA) and the Administrative Procedure Act (APA). The court is considering the defendants’ motion to dismiss and MCRC's motion for discovery. The court will grant the motion to dismiss and deny the motion for discovery.
MCRC plans to fill 25 acres of wetlands for road construction, requiring a section 404 permit under the CWA. The CWA, established by the Federal Water Pollution Control Act (FWPCA) in 1972, prohibits pollutant discharges into waterways without a permit. The CWA provides two permitting systems: the National Pollutant Discharge Elimination System (NPDES) for point sources, and the section 404 system for dredged or fill material overseen by the Army Corps of Engineers.
MCRC applied for its permit through the Michigan Department of Environmental Quality (MDEQ), which implements Michigan’s federally-approved CWA wetland permit program. States can take over the NPDES permitting system under the FWPCA, and the CWA of 1977 allows states to establish their own 404 permitting systems, with some federal oversight retained. States must submit all permit applications to the EPA, which must notify the Army Corps and other federal agencies within specified time frames if it intends to comment on the state's permit decisions.
Plaintiff initially applied to the MDEQ in October 2011 and submitted a revised application in January 2012. The MDEQ forwarded the application to the EPA, the Corps, and the FWS. On April 23, 2012, following consultations, the EPA objected to the permit issuance, citing non-compliance with section 404 of the Clean Water Act (CWA) and related guidelines, particularly regarding the lack of demonstration that the proposed road was the least environmentally damaging alternative. Under CWA section 404(j), a state cannot issue a permit if the EPA objects, and the state may request a hearing to discuss its grievances.
Over several months, discussions took place among the Plaintiff, MDEQ, and EPA, leading to two further revised applications in June and July 2012. The EPA held a public hearing on the third revised application in August. On September 17, 2012, MDEQ indicated it could soon issue a permit and urged the EPA to withdraw its objections. However, on December 4, 2012, the EPA withdrew some objections but maintained others, asserting inadequate plans to mitigate impacts. The EPA provided MDEQ with 30 days to issue a compliant permit or notify of a denial.
From December 4 to December 27, 2012, Plaintiff sought clarification on EPA's objections but received no substantial guidance. On December 27, 2012, Plaintiff urged MDEQ to issue a permit. However, on January 3, 2013, MDEQ informed the EPA that it would not issue a permit due to time constraints and complexity, transferring application authority to the Corps. The Corps subsequently indicated it would not process the third revised application, requiring Plaintiff to submit a new application, which Plaintiff declined to do. This led to Plaintiff initiating a five-count declaratory judgment action.
Count I of the complaint alleges that the EPA's objections to the permit application were arbitrary and capricious. Count II claims the EPA exceeded its authority by issuing objections not mandated by the Clean Water Act (CWA). Count III asserts that the EPA failed to specify the necessary conditions for permit issuance as required by section 404(j) of the CWA. Count IV contends that the EPA did not adhere to the procedural requirements of section 404(j). Count V claims that the Corps improperly denied the permit application by failing to act on it.
Defendants argue for dismissal under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, asserting that the complaint does not state a claim for relief and that the court lacks subject matter jurisdiction over the EPA claims. They assert that the EPA's actions are not reviewable as they do not constitute 'final agency action' under the Administrative Procedure Act (APA). However, the court notes that the APA does not confer jurisdiction; instead, jurisdiction arises from 28 U.S.C. 1331, which allows federal courts to review agency actions regardless of the APA's final agency action requirement. Therefore, the court will not dismiss the claims for lack of jurisdiction but will assess whether they present a viable cause of action.
In reviewing a Rule 12(b)(6) motion, the court must view the complaint favorably toward the plaintiff, accepting allegations as true while disregarding legal conclusions and unwarranted factual inferences. A complaint must provide a clear statement of the claim and its grounds to give the defendant fair notice, without needing detailed factual allegations. The standard requires that the complaint presents facts sufficient to establish a plausible claim for relief, raising it above mere speculation.
Section 704 of the Administrative Procedure Act (APA) allows for judicial review of final agency actions, but neither party claims that the EPA's actions are reviewable by statute. The defendants argue that the plaintiff fails to establish a viable claim against the EPA because its actions do not qualify as 'final agency action.' The Court concurs and applies a two-prong test to determine finality: (1) the action must be the consummation of the agency's decision-making process, and (2) it must determine rights or obligations or create legal consequences. An action is not final if it only adversely affects rights contingent on future administrative actions.
The case examines whether the EPA's objections to a state-issued section 404 permit constitute final agency action. The Sixth Circuit's precedent in Friends of Crystal River indicates that an EPA objection generally does not represent final agency action and is not subject to judicial review. This conclusion is supported by past cases, like American Paper Institute v. EPA, which found that the EPA’s discretionary objections are non-reviewable. The Sixth Circuit suggests that a stronger rationale for deeming EPA objections non-reviewable is their non-final nature since the EPA can still take various actions post-objection.
The Friends of Crystal River case serves as a comparison, where the EPA had objected to a permit but later withdrew its objections, transferring permitting authority back to the state, a move that the court found to be reviewable as it represented a final, non-discretionary act affecting federal involvement. In the current case, the inability of the EPA and the state to resolve objections did not result in a similar withdrawal, keeping the objections at issue.
EPA objections to state permit applications are not considered final decisions that conclude the agency's decision-making process, as established under the first prong of the Bennett analysis. Following its objections, the EPA remains engaged with both the state and the permit applicant, retaining the ability to modify or withdraw its objections based on further information or hearings. Even after permitting authority has been transferred to the Corps, the objections are characterized as tentative and interlocutory, allowing the Corps to issue permits irrespective of EPA objections. This approach aligns with precedents indicating that EPA objections are not final, as seen in cases like American Paper Institute and Champion International Corp.
The administrative process remains open, with potential outcomes including the state issuing its own permit, the EPA withdrawing its objections, or the EPA issuing a final National Pollutant Discharge Elimination System (NPDES) permit. Prior to the 1977 amendments to the Federal Water Pollution Control Act (FWPCA), EPA objections functioned effectively as a veto, but the amendments provided the EPA with the authority to issue permits even when objections were unresolved, thereby altering the legal landscape. This shift casts doubt on previous case law that treated EPA objections as final actions akin to permit denials.
The permitting processes for discharge permits under section 402 and dredge-and-fill permits under section 404 are comparable. States can issue permits under both sections, but their authority is subject to oversight by the EPA, which is notified of permit applications and has the right to object. If a state fails to address EPA objections within specified time frames—30 days post-hearing or 90 days post-objection without a hearing—authority to issue the permit transfers from the state to the EPA for section 402, while it transfers to the Corps for section 404. The plaintiff claims that unresolved EPA objections to a section 404 permit are considered final, which would indicate no further action is required from the EPA. This contention draws from the Michigan Peat v. EPA case, where the EPA’s withdrawal of objections was deemed final. However, this case is distinguished because the permit in question was neither granted nor denied, which is essential for a final reviewable decision. Furthermore, the EPA retains authority to withdraw objections or collaborate with states even after the permitting authority has shifted. Under section 404, the Corps must specify disposal sites for dredged materials, and section 404(c) allows the EPA to prohibit certain disposal sites if they may cause adverse effects, demonstrating ongoing EPA authority in the permitting process.
The Corps is likely to consult the EPA when reviewing permit applications, similar to the EPA's consultation with the Corps regarding the Plaintiff's state permit application. In Sackett v. EPA, the EPA issued a compliance order for illegal wetland filling, which the Court deemed a final, reviewable action, marking the end of the agency's decision-making process. Unlike Sackett, the EPA's decision in the Plaintiff's case allows for further review by the Corps, which is not obligated to follow the EPA's objections. The Court in Sackett rejected the notion that seeking a permit from the Corps could serve as an adequate remedy for the EPA's compliance order, emphasizing that remedies from one agency do not necessarily address actions taken by another. The Plaintiff argues that the EPA's objections should be considered final, despite the Corps' ability to issue a permit, which the Court argues misinterprets Sackett’s context regarding remedy adequacy versus finality. The Plaintiff's claim that the potential future action by the Corps should not inhibit review of the EPA's actions is countered by the certainty of receiving a final decision upon submitting a proper application to the Corps, which must address all issues raised, including those from the EPA.
EPA objections do not definitively establish Plaintiff's rights or obligations and do not lead to legal consequences. Under the Bennett analysis, these objections do not meet the criteria for decisive action. Unlike the plaintiffs in Sackett, who faced immediate requirements from a compliance order, Plaintiff is not compelled to take any new actions due to the EPA's objections. Instead, these objections have merely extended the administrative process already initiated by Plaintiff, who can still pursue a permit from the Corps. The case of Alaska Dep’t of Environmental Conservation v. EPA is referenced, where the EPA's compliance orders imposed new legal obligations and consequences on the parties involved. In contrast, the EPA's objections to Plaintiff's permit application do not create additional legal obligations; Plaintiff was already required to obtain a dredge-and-fill permit prior to the objections and remains in the same position regarding this requirement. Furthermore, the state did not issue a permit, and the EPA's actions do not hinder Plaintiff's ability to obtain one.
Authority for issuing a federal permit has shifted from a state agency to a federal agency, leading the Plaintiff to argue that this transfer has significantly changed the legal framework governing its operations. The Plaintiff highlights that Michigan’s section 404 permit program incorporates specific state statutes and regulations, unlike the Corps' regulations, which are described as vague. Notably, the definitions of "wetland" and public interest factors differ between Michigan and federal law, reflecting the independent clean water regulations maintained by both the federal government and the State of Michigan. Despite the regulatory differences, compliance with both state and federal laws remains mandatory. The Plaintiff also points out procedural disparities, including shorter response times under Michigan regulations compared to the Corps' process, which is subject to the National Environmental Policy Act (NEPA) review—a lengthy and costly procedure. However, these procedural differences and increased administrative costs do not constitute sufficient grounds for establishing final agency action under the Administrative Procedure Act (APA), as clarified by relevant case law. Thus, the added burden of seeking a permit from the Corps does not render the Environmental Protection Agency’s actions final under the APA.
Plaintiff contends that the EPA's objections present two options: proceed with construction and risk enforcement actions or submit a new application to the Corps, which is seen as costly and futile. However, the obligation to obtain a permit predates the EPA's objections, which have not changed the requirement for a permit. The second option is a consequence of Congress's response to the state's delays in addressing EPA concerns, and the associated costs do not render the EPA's actions final or subject to review under the Administrative Procedure Act (APA). Plaintiff's claim that a new application would be futile lacks support.
In Count II, Plaintiff alleges that the EPA acted beyond its authority, failing to comply with section 404(j) of the Clean Water Act. It argues that the EPA raised issues that are discretionary for the Michigan Department of Environmental Quality (MDEQ) and did not specify the conditions for issuing a permit as required. Plaintiff seeks review under the Leedom v. Kyne exception, which allows for judicial review when an agency acts beyond its delegated powers and contrary to statutory prohibitions. However, the Sixth Circuit has restricted this exception to extreme cases demonstrating a clear usurpation of power, not merely challenges to an agency's authority. To qualify for the exception, the agency's actions must indicate a blatant violation of its authority or a significant infringement of rights that cannot be remedied through standard review processes.
The plaintiff claims that the EPA failed to list necessary conditions for issuing a permit, overlooking a detailed December 4, 2012, letter from the EPA that outlined these conditions, including compliance with the 2008 Federal Mitigation Rule. Key requirements include the identification of a third-party land steward for wetland management, adaptive long-term management plans with monitoring schedules and funding mechanisms, and measurable performance standards for stream mitigation.
Regarding objections to the permit, the plaintiff argues that the EPA based its objections on factors beyond its statutory authority, specifically citing concerns about the magnitude of environmental impacts and the adequacy of mitigation plans. The plaintiff contends that these factors are discretionary for the state to determine, as they are not explicitly defined as "requirements" under the Clean Water Act (CWA). However, the document clarifies that the EPA possesses statutory authority to issue objections based on its determination that a permit does not meet CWA requirements. It emphasizes that the CWA and its regulations do not grant exclusive discretion to the states and that many guidelines inherently involve qualitative and quantitative assessments, which the EPA is authorized to consider when evaluating permit applications.
Discharge is prohibited under specific conditions: when a "practicable" alternative exists that has less adverse impact, when the discharge would significantly degrade U.S. waters, or when efforts to minimize potential adverse impacts have not been made. A mitigation plan must be prepared that aligns with the scale and scope of these impacts. The plaintiffs' interpretation of the EPA's authority is overly narrow and unsupported by statutory language or legislative history. Section 402 of the Clean Water Act (CWA) allows the EPA to challenge state permits that fall outside established guidelines, without restricting objections to solely qualitative or quantitative aspects. Legislative history indicates a desire for strong EPA oversight and acknowledges risks of “pollution havens” due to state permit programs. While the CWA encourages state involvement in pollution management, the 1977 amendments emphasize the need for expanded federal oversight. Therefore, the EPA's objections to the proposed permit were valid and did not violate its authority or infringe upon the plaintiffs' rights.
In Count V, the plaintiff claims that the Corps' inaction on their permit application constitutes a "constructive denial." The Corps indicated that a new permit application was necessary, which the plaintiff did not pursue. The plaintiff seeks to have this constructive denial overturned and the permit approved. Defendants argue this claim lacks merit, as the Administrative Procedure Act (APA) only allows for the compulsion of legally required agency actions. A claim under 5 U.S.C. § 706(1) can only proceed if an agency failed to take a required discrete action.
Section 404 of the Clean Water Act (CWA) allows the Secretary to issue a permit if a state fails to submit a revised permit addressing EPA objections within the required timeframe. While this provision implies that the Corps can issue permits, it does not mandate action. Before the Corps is obligated to act on a permit application, the applicant must provide all necessary information as outlined in subsection (a) of the CWA, which applies universally, including in states without a federally-approved permitting program. The Corps' regulations specify detailed requirements for permit applications, including the correct forms, content, and fees, which the plaintiff has not claimed to have fulfilled. Although the plaintiff cites an EPA regulation stating that the Corps must process applications when state objections are unresolved, this regulation does not prescribe a specific procedure or require the Corps to consider state-submitted applications. The Corps is not bound by EPA regulations and has the discretion to establish its own processes for permit applications. The Corps has opted to apply the same procedures to all applications, regardless of whether the authority has shifted from the state. This approach is practical; the Corps needs to ascertain the relevance of submitted materials and ensure it has complete information, especially since changes may occur in the applicant's proposal while addressing EPA objections. Applicants may choose to revise their proposals further or delay their applications after the authority transfers to the Corps.
An applicant can disregard EPA objections if it believes they are invalid and may modify its application accordingly. In this case, the Plaintiff revised its application multiple times after receiving EPA feedback, continuing to pursue compliance even after the EPA objected to its third revised application in December 2012. The Corps is not obligated to consider the latest version submitted to the state as the relevant application nor to assume it has all necessary information for evaluation. The Plaintiff argues that filing an application with the Corps would be futile, referencing prior Corps comments questioning the project’s purpose and highlighting deficiencies. However, the Plaintiff's belief in futility does not exempt it from filing a formal application prior to seeking judicial review.
The Plaintiff cites an email from an EPA employee to the Corps, suggesting bias against the project, but this does not constitute evidence of bias from the Corps. Consequently, the Plaintiff fails to assert a valid claim regarding the Corps' inaction, as the Corps was not legally required to act without a proper application. Furthermore, even if the Plaintiff had a valid claim, the requested relief for the Corps to issue a permit is not within the court's authority. The Administrative Procedure Act (APA) allows courts to compel agencies to take action but does not permit direction on how to act. Thus, the court can only require the Corps to consider the application, not to issue a permit. The court grants the Defendants' motion to dismiss because the Plaintiff does not state a claim against the EPA or the Corps. As a result, the Plaintiff's motion for discovery is rendered moot. The Clean Water Act does not make EPA objections to a state permit binding on the Corps.
Plaintiff contends that the EPA incorrectly allowed only 30 days for the state to respond to its final objection dated December 4, 2012, arguing that the statute mandates a revised permit submission within 30 days following a public hearing on August 28, 2012, as per 33 U.S.C. 1344(j). The Plaintiff does not assert that the state complied with this requirement. EPA regulations, however, permit the state to issue a revised permit within 30 days of notification that the EPA will not withdraw its objection (40 C.F.R. 233.50(h)(2)). Unless the Plaintiff challenges these regulations, the EPA's 30-day timeline is not improper.
The text clarifies that the EPA and the Corps retain their respective permitting authorities under sections 402 and 404, despite states having the option to administer their own permitting programs with EPA and Corps approval (33 U.S.C. 1342(a) and 33 U.S.C. 1344(a)). Applicants in states without approved programs must apply directly to the EPA or the Corps.
The Plaintiff references several cases to argue the finality of agency actions. However, it is noted that the EPA's objections do not impose binding decisions on future proceedings, contrasting with cases where agency decisions conclusively affected rights or required specific actions from the plaintiffs. The notion of finality in administrative actions is discussed, emphasizing that an order remains nonfinal if it is tentative or subject to revision. The EPA's objections fall under this category, as they are open to recall and reconsideration by the Corps. The summary also addresses the implications of past cases, indicating that while some agency determinations may be considered final, those similar to the Plaintiff's situation do not meet this threshold, as no permit has been granted or denied.
EPA’s designation of lands as disputed Indian lands mandated that the plaintiff apply for a permit, distinguishing this case from HRI, where the plaintiff was previously eligible for a permit exemption. Unlike HRI, the plaintiff was required to obtain a Clean Water Act (CWA) permit before the EPA issued its objections. The case of Hawkes lacks persuasive value since the plaintiff there was also required to comply with the CWA prior to the Corps' jurisdictional determination, and its reasoning is inconsistent with other circuit court decisions. The Corps' jurisdictional determination is deemed not reviewable, supported by cases such as Belle Co. LLC v. U.S. Army Corps of Eng’rs and Fairbanks N. Star Borough v. U.S. Army Corps of Eng’rs. The plaintiff's focus on the EPA's initial objections to its first revised permit application is flawed, as those objections were partially rendered moot by subsequent revisions that led the EPA to affirm the identification of the least environmentally damaging alternative. The plaintiff has not justified why these initial objections, which were later superseded, warrant review. Additionally, the plaintiff seeks discovery of information considered by the EPA regarding potential bias against the application, but this information is deemed irrelevant to the motion to dismiss.
