Today the Supreme Court issued a decision, described below, of interest to the business community.

Coeur Alaska, Inc. v. Southeast Alaska Conservation Council, Nos. 07-984 and 07-990

Section 402 of the Clean Water Act (“CWA”) grants the Environmental Protection Agency (“EPA”) the authority to “issue a permit for the discharge of any pollutant” “[e]xcept as provided in [Section 404].” 33 U.S.C. § 1342(a).  Section 404 of the CWA grants the U.S. Army Corps of Engineers (“the Corps”) the authority to “issue permits . . . for the discharge of dredged or fill material.”  Id. § 1344(a).  In a 6-3 decision issued today, the Supreme Court held that the authority to issue a permit for the discharge of fill material rests exclusively with the Corps, and that performance standards promulgated by the EPA under Section 306 of the CWA do not apply to such discharges.

Writing for the majority, Justice Kennedy concluded that the text of Section 402, which permits the EPA to issue permits for the discharge of any pollutant “[e]xcept as provided in [Section 404],” necessarily prohibits the EPA from exercising permitting authority over discharges that meet the definition of “fill material” as provided in Section 404.  Moreover, concluding that the statute is ambiguous and the agencies’ regulations do not resolve the statutory ambiguity, the Court gave a “measure of deference” to an internal memorandum of the EPA in concluding that its otherwise applicable performance standards under Section 306 do not apply to discharges of fill material.  Slip op. 20.

Justice Breyer’s concurrence emphasized that the Corps’ authority under Section 404 is limited to discharges that satisfy the definition of “fill material,” and that any permit issued under this authority also remains subject to the EPA’s veto.  Justice Scalia, concurring in part and concurring in the judgment, noted the difficulty in determining what “measure of deference” should be given to an agency’s internal memorandum under prior Court precedent.  He would have overruled United States v. Mead Corp., 533 U. S. 218 (2001), and applied traditional Chevron-style deference in this case.

Justice Ginsburg’s dissenting opinion, joined by Justices Stevens and Souter, warned that, under the Court’s interpretation, “whole categories of regulated industries” might “gain immunity from a variety of pollution-control standards” simply by adding sufficient solid matter to transform a “pollutant” governed by Section 306 into “fill” governed by Section 404. Dissenting op. 7.  In her view, such a reading contravenes the text, structure, and purpose of the CWA.

Today’s decision has significant implications for the business community because it clearly delineates the permitting authority of the EPA from that of the Corps, and clarifies the Corps’ authority to issue Section 404 dredge and fill permits in jurisdictional waters without treating those discharges as pollutants subject to Section 402.

Mayer Brown LLP had represented Coeur Alaska, Inc. at an earlier stage of the proceedings.