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When is a Permit not a Permit?

You have to wonder when enough will be enough for America’s investors.  A 2013 Court Decision makes an investor wonder.

In a March 4, 2014 argument filed before the US Supreme Court, Arch Coal compellingly argued that the “EPA claims sweeping authority to nullify a permit issued years earlier by another agency, with no consideration of the permit holder’s reliance interests and without any need to base its veto on new information.  EPA’s unprecedented action far exceeds its carefully circumscribed role under Section 404 of the Clean Water Act (“CWA”), and threatens to chill billions of dollars of public and private investment in critical sectors of the economy.” 

arch coal spruce mine no. 1

On March 24, 2014, the US Supreme Court declined to hear Arch’s challenge; essentially allowing the prior ruling in the lower court to stand.

The EPA said it would veto the 2011 CWA permit issued for the Spruce No. 1 mining project years after the US Army Corps of Engineers had given its approval.  The permit, issued under the CWA, allowed Mingo Logan Coal Company, an Arch subsidiary, to discharge waste material into nearby water.  Although the EPA has challenged projects under consideration by the Army Corps, which has the job of issuing permits under the Clean Water Act, it was the first time the agency had ever blocked a project after a permit was approved.

Why on earth would investors ever plow money into a project that depended on a federal permit if the EPA has the right (and the courts agree) to veto the permit anytime the EPA wants to; even when the permit was issued by another federal agency?  That seems to be a reasonable question to ask given the court decision.  The answer is probably, “they wouldn’t.”

I have a friend who conducts oil and gas exploration in Africa – a country some might describe as politically unstable.  My friend prefers to invest and do business outside the United States with foreign governments such as those in Africa because they are far more predictable.  Whoever though that would be the case?

About the Author

Gerald L. Kirkpatrick, P.G. is a Principal Geoscientist and the Managing Partner of Environmental Standards, Inc.  Mr. Kirkpatrick has more than 30 years of applied environmental geoscience experience in both private industry and environmental consulting. Outside of work, Gerry enjoys fishing and an occasional single malt.  A very poor chess player, he remains dedicated to the game, nonetheless.