Opposition Brief — Peat v. Environmental Protection Agency

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Supeeme Count, US.

FILED

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No. 01-1384 MAY 22 ne

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In the Supreme Court of the AMES tes

MICHIGAN PEAT, PETITIONER

tL.

ENVIRONMENTAL PROTECTION AGENCY, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

THEODORE B. OLSON

Solicitor General

Counsel of Record

THOMAS L. SANSONETTI

Assistant Attorney General

DAVID C. SHILTON

JOSHUA M. LEVIN

ANDREW J. DOYLE

ELIZABETH ANN PETERSON

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

preemie:

QUESTION PRESENTED

Whether Section 404 of the Clean Water Act, 33

U.S.C. 1344, and regulations promulgated thereunder,

direct the transfer of permitting authority to the

United States Army Corps of Engineers when an

authorized State fails to issue a permit that satisfies

objections timely communicated to the State by the

Environmental Protection Agency.

(I)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

Friends of Crystal River v. United States EPA,

ee Ie UN Es BIPOPOD seni znstninnoninssnonssbnsvecsscininicnunisdasin 4

Michigan Peat v. Regional Adm’r of Region V of the

United States EPA, 7 F. Supp. 2d 896 (E.D. Mich.

SETS SC OTL Ra ER 9

Pennsylvania Dep’t of Corrs. v. Yeskey, 524 U.S. 206

SUIT saihrshhciniinotehealininininnsionntecentnaninensinnessastensansernsstatersoneiahionass 14

United States v. Bay-Houston Towing Co., Inc.,

No. 98-73252, 2002 WL 537630 (E.D. Mich. Mar. 13,

I utscsecensicasconiiiiyhaphatiassaniiaceinesnniinieundenncasinndsiTiandnnahsansananiaanits 17

United States ex rel. Accardi v. Shaughnessy,

i essential odiahasannashiniineton 14

Statutes and regulations:

Federal Water Pollution Control Act Amendments of "

1972, Pub. L. No. 92-500, 86 Stat. 816, as amended,

Pub. L. No. 95-217, 91 Stat. 1566 (33 U.S.C. 1251

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(IIT)

Statutes and regulations—Continued: Page _

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33 U.S.C. 1362(6) (Supp. V 1999) ..............s0cscscssesssssseees 2

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40 C.F.R.:

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Miscellaneous:

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Jn the Supreme Court of the Gnited States

No. 01-1384

MICHIGAN PEAT, PETITIONER

VU.

ENVIRONMENTAL PROTECTION AGENCY, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF FOR THE RESPONDENTS IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-2a)

is unreported. The opinions of the district court (Pet.

App. 3a-9a, 10a-19a) are unreported. A prior opinion of

the court of appeals in this case (Pet. App. 20a-32a) is

reported at 175 F.3d 422. A prior opinion of the district

court is reported at 7 F. Supp. 2d 896.

JURISDICTION

The judgment of the court of appeals was entered on

September 18, 2001. A petition for rehearing was

denied on November 16, 2001 (Pet. App. 33a-34a). On

February 5, 2002, Justice Stevens extended the time

within which to file a petition for certiorari to and

including March 18, 2002 (Pet. App. 35a), and the

(1)

petition was filed on that date. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. Congress enacted the Federal Water Pollution

Control Act Amendments of 1972, Pub. L. No. 92-500,

86 Stat. 816, as amended, Pub. L. No. 95-217, 91 Stat.

1566 (33 U.S.C. 1251 et seg.) (Clean Water Act or

CWA), “to restore and maintain the chemical, physical

and biological integrity of the Nation’s waters.” 33

U.S.C. 1251(a). The Act prohibits the discharge of any

pollutant from a point source into “navigable waters”

except in accordance with the Act. 33 U.S.C. 131i<a);

see 33 U.S.C. 1362(6) (Supp. V 1999), (7) and (12) (defin-

ing “pollutant,” “navigable waters,” and “discharge of a

pollutant”). Section 404(a) of the Act authorizes the

Secretary of the Army, acting through the United

States Army Corps of Engineers (Corps), to “issue per-

mits * * * for the discharge of dredged or fill material

into the navigable waters at specified disposal sites,”

subject to the terms and procedures set forth in the

CWA. 33 U.S.C. 1344(a).

The CWA provides that “{iJt is the policy of the Con-

gress to recognize, preserve, and protect the primary

responsibilities and rights of States to prevent, reduce,

and eliminate pollution [and] to plan the development

and use (including restoration, preservation, and en-

haneement) of land and water resources.” 33 U.S.C.

1251(b). Consistent with that policy, the CWA allows

the States to assume the primary role of administering

several of the permitting programs established by the

Act, including the Section 404 permitting program, sub-

ject to continuing federal oversight. 33 U.S.C. 1344.

The Act provides that “(t]he Governor of any State

desiring to administer its own individual and general

permit program for the discharge of dredged or fill

material into” particular categories of navigable waters

may submit to the Environmental Protection Agency

(EPA) “a full and complete description of the program

it proposes to establish and administer under State

law.” 33 U.S.C. 1344(g)(1). If EPA determines that the

state program satisfies the statutory criteria, see 33

U.S.C. 1344(g), EPA shall approve the program and so

notify the State. 33 U.S.C. 1344(h)(2)(A).’

Even where a state-administered program is in

effect, the EPA retains substantial oversight and en-

forcement responsibilities. The Act requires the admin-

istering state agency to transmit to EPA “a copy of

each permit application received by such State and

provide notice to [EPA] of every action related to the

consideration of such permit application, including each

permit proposed to be issued by such State.” 33 U.S.C.

1344(j). EPA is in turn directed to forward the appli-

cation to the Corps and to the Fish and Wildlife Ser-

vice, an agency within the Department of the Interior.

33 U.S.C. 1344(j). If EPA intends to submit written

comments to the State with respect to the permit

application, it must so notify the State within 30 days

after receipt of the permit application and must provide

the written comments not later than 90 days after the

date of such receipt. 33 U.S.C. 1344(j). If EPA submits

a timely objection to the issuance of the proposed

permit, a State “shall not issue the proposed permit”

unless the State “modifies such proposed permit in ac-

cordance with [EPA’s] comments.” 33 U.S.C. 1344()).

1 EPA regulations concerning the submission and approval (or

disapproval) of State-submitted CWA Section 404 programs are

published at 40 C.F.R. 233.10-233.16. See also 40 C.F.R. 233.53

(withdrawal of approval).

The State retains authority to issue the permit so long

as it modifies the proposed permit to meet EPA’s con-

cerns within the time limitations set out in 33 U.S.C.

1344(j). If EPA’s objections cannot be resolved, how-

ever, the State may not issue the permit. In that

situation, permitting authority as to that permit reverts

to the Corps of Engineers, by operation of law.” See

Friends of Crystal River v. United States EPA, 35 F.3d

1073, 1075 (6th Cir. 1994).

EPA’s regulations regarding permit applications sub-

mitted under a state-administered Section 404 permit-

ting program, and regarding federal oversight of such

permit applications, are published at 40 C.F.R. 233.30-

233.38 and 233.50-233.51. Those regulations provide

that, in the absence of EPA objections, a State-issued

permit “becomes effective when it is signed by the Di-

rector [of the pertinent state agency] and the appli-

cant.” 40 C.F.R. 233.35(b)(1). The regulations further

provide that “[{iJn the event that the Director [of the

pertinent state agency] neither satisfies EPA’s objec-

tions or requirement for a permit condition nor denies

the permit, the Secretary [of the Army] shall process

the permit application.” 40 C.F.R. 233.50()j).

Michigan and New Jersey are the only two States

with approved CWA Section 404 permitting programs.

See 40 C.F.R. 233.70, 233.71. The approved Michigan

Section 404 permitting program appears at 40 C.F.R.

2 “In any case where [EPA] objects to the issuance of a permit,

on request of the State, a public hearing shall be held by [EPA] on

such objection. If the State does not resubmit such permit revised

to meet such objection within 30 days after completion of the hear-

ing or, if no hearing is requested within 90 days after the date of

such objection, the Secretary [of the Army] may issue the permit

* * * in accordance with the guidelines and requirements of [the

Act].” 33 U.S.C. 1344()).

233.70. Section 233.70 provides that “[t]he applicable

regulatory program for discharges of dredged or fill

material into waters of the United States in Michigan

* * * is the program administered by the Michigan

Department of Natural Resources [DNR].” The State

recently transferred the responsibility for administer-

ing its Section 404 program from the DNR to its

Department of Environmental Quality (DEQ). 62 Fed.

Reg. 61,173 (1997).

2. Petitioner Michigan Peat conducts business ac-

tivities that involve the mining of peat from wetlands

parcels situated near Minden, Michigan. Pet. App. 24a.

The company owns or controls two wetlands parcels,

referred to as Minden North and Minden South, that

are situated within a wetlands area known as the

Minden Bog. Jbid.’ In 1991, petitioner applied to the

DNR for a permit that would authorize the company to

discharge dredged or fill materials and to conduct re-

lated activities in the Minden tracts. C.A. App. 209.

That application was subsequently withdrawn to allow

the company additional time to complete the necessary

environmental assessment studies. Jbid. On Septem-

_ 3% Minden Bog is described as follows in DNR’s March 21, 1995,

report prepared in response to Michigan Peat’s 1994 permit appli-

cation:

Minden Bog is a rare and irreplaceable wetland ecosystem

which has significant ecological and scientific value. It is

located in Sanilac County, where approximately 78 percent of

the wetlands which existed prior to European settlement have

been lost, along with wetland functions such as flood storage,

wildlife habitat, and groundwater recharge. Currently, the

Minden Bog includes about 4000 acres on State and private

land, of which about 3200 acres exists in a natural and undis-

turbed condition.

C.A. App. 207.

—

‘ber 19, 1994, Michigan Peat again submitted a permit

application to DNR. 7d. at 308.

In December 1994, after obtaining comments from

the Corps and the Fish and Wildlife Service, EPA for-

mally notified DNR that EPA objected to petitioner’s

application. C.A. App. 74, 97. DNR and EPA subse-

quently conducted numerous discussions to address

EPA’s concerns. /d. at 97. Those discussions resulted

in a revised draft permit that would have restricted

peat mining to previously disturbed areas in Minden

North and ensured that additional wetland losses in the

Minden Bog complex were avoided. Jbid. The pro-

posed permit would also have required the company to

reclaim all 830 previously disturbed acres to wetlands

after mining, without regard to the date when mining

had first occurred. Jbid. By letter dated March 21,

1995, EPA advised DNR that EPA was withdrawing

its objections. bid. That letter stated in part:

The State’s draft permit effectively addresses con-

cerns previously raised by EPA and, on that basis, I

am withdrawing our objection in accordance with

provisions of 40 CFR 233.50(j), on condition that the

final permit not differ materially from this draft. If

there are substantive changes to this draft decision

by MDNR, we would need to review these changes to

determine whether or not they are material to us.

Ibid. (emphasis added).

On March 21, 1995, DNR tendered a proposed permit

to petitioner. C.A. App. 98; see Pet. App. 25a. That

permit stated that “[a]pproximately 749 acres of bog

were disturbed prior to passage of” the State’s wet-

lands protection law and that “[t]hese areas [of the

Minden North tract] do not require a permit from the

Michigan Department of Natural Resources to continue

the peat mining activity.” C.A. App. 104. The tendered

permit would also have authorized peat extraction

activities within an additional previously disturbed area

of approximately 202 acres of the Minden North tract,

subject to certain conditions and restrictions (including

requirements for reclamation of all disturbed areas of

the bog without regard to when mining had commenced

on them). See id. at 101, 106. The tendered permit

would not have authorized activities on the remaining

portions of the north parcel and would have denied

authorization as to the entire south parcel. Jd. at 101-

102. Finally, the tendered permit stated that the

“permit shall become valid on the date of signature by

the permittee.” Jd. at 111; see also id. at 101 (DNR

cover letter states that “[t]his permit is not valid until it

is signed by the permittee”).

3. Petitioner did not sign and return the tendered

permit. Instead, petitioner initiated a state administra-

tive appeal in “an effort to change the limitations and

conditions of the draft permit.” Pet. App. 4a; see id. at

26a. Petitioner also filed an action against the State in

the Michigan Court of Claims, alleging that the denial

of its permit request with regard to the undisturbed

portions of the properties effected a taking of property

that required the payment of just compensation. C.A.

App. 21; Pet. App. 26a-27a.

4, On May 16, 1997, petitioner filed suit in federal

district court against EPA and other federal parties.

Pet. App. 28a. Petitioner sought, inter alia, a declara-

tion that its operations were in full compliance with

CWA Section 404. Jbid. On June 6, 1997, DEQ issued

_Permit No. 94-8-342, which authorized petitioner to ex-

tract peat on 2819 acres of the company’s Minden par-

cels, subject to certain restrictions and limitations.

C.A. App. 123. That permit stated, however, that

“ISSUANCE OF THIS PERMIT DOES NOT AUTHOR-

IZE ANY WORK UNDER THE AUTHORITY OF THE

FEDERAL CLEAN WATER ACT. Any work initiated

on-this project without required Section 404 approval

may be considered a violation of Federal law.” Jbid.;

see Pet. App. 27a. The cover letter that accompanied

the permit stated that, because of EPA’s continuing

objections, DEQ was “precluded by federal law from

authorizing this project under Section 404 of the Clean

Water Act” and that petitioner could “seek federal

authorization for the project directly from the U.S.

Army Corps of Engineers, Detroit District.” C.A. App.

173.

By letter to DEQ dated June 18, 1997 (C.A. App. 182-

133), EPA “observed that the state permit differed

greatly from the proposed [May 1995] Section 404

permit,” and noted that EPA “had objected to earlier

proposals to authorize certain activities encompassed in

the new state permit.” Pet. App. 27a. The letter also

stated that “({a] final permit issued by the MDNR on

March 21, 1995 was rejected by [petitioner] and has

never become effective.” C.A. App. 1382. EPA advised

DEQ that because it had failed to issue a final permit

that satisfied EPA’s objections, “pursuant to Section

404(}) of the CWA and 40 C.F.R. § 233.50(j), authority

to process [petitioner’s] permit application has been

transferred by operation of law to the U.S. Army Corps

of Engineers.” Jd. at 133. On June 23, 1997, the Corps

advised petitioner that the State’s CWA Section 404

permitting authority with regard to the Minden parcels

had been transferred to the Corps. /d. at 175. The

Corps further informed the company that “[t]he pro-

cessing of a federal Section 404 permit by the Corps will

begin upon the Corps’ receipt of a complete application

from you.” Ibid.

o> -

—_ —-—

Petitioner thereafter amended its complaint in the

Suit against the federal defendants to add DEQ, its

director, and the State of Michigan as defendants, and

to assert additional claims. The district court dismissed

the claims against the state defendants based on Elev-

enth Amendment immunity, and it dismissed the claims

against the federal defendants for lack of subject-

matter jurisdiction. Michigan Peat v. Regional Adm’r

of Region V of the United States EPA, 7 F. Supp. 2d

896 (E.D. Mich. 1998); see Pet. App. 28a-29a. The court

of appeals affirmed the judgment of the district court

with respect to the claims against the state defendants,

but reversed the district court’s dismissal of peti-

tioner’s claims against the federal defendants. /d. at

20a-32a. The court found that EPA’s conditional with-

drawal of objections to the proposed 1995 permit con-

stituted “final agency action” subject to review in fed-

eral court. Jd. at 29a-30a. The court remanded the case

to the district court for further proceedings. Jd. at 32a.

5. On remand, the district court ruled in favor of the

federal defendants (respondents in this Court). In an

opinion dated January 24, 2000, the court entered par-

tial summary judgment for the respondents. Pet. App.

10a-19a. The court rejected petitioner’s contention that

the Corps had acted improperly by assuming regula-

tory authority over petitioner’s CWA Section 404 appli-

cation after the DEQ had granted a “state-only” permit.

Id. at 16a-17a. The court observed that “under § 404(j)

of the CWA [33 U.S.C. 1344(j)] the authority to issue

§ 404 permits is transferred from a state back to the

Corps as a matter of law wherever a state has failed

within the time prescribed by law to amend its

proposed permit to conform to objections raised by the

EPA.” Jd. at 16a. The court then explained:

While it is true that the State here did satisfy the

EPA’s objections during the 90 day period as to the

March 1995 permit, and only later issued the state-

only permit which failed to conform to the EPA’s

objections, there is no compelling reason to bar the

transfer of authority beyond this 90 day period. The

state-only permit constituted a second permit

decision.

Ibid. The district court stated that petitioner “had the

right to administratively appeal MDEQ’s decision” to

impose conditions in the March 1995 proposed permit,

“and MDEQ had the authority to issue a state-only

permit.” Jd. at 17a. The court observed, however, that

“(njone of this changes the provision under 40 C.F.R.

§ 233.[5]0 that if the state does not satisfy the EPA’s

objections or deny the permit, authority to process the

§ 404 permit is transferred to the Corps.” Jbid. The

court reserved for further proceedings the question

whether the EPA’s withdrawal of objections to the

March 1995 proposed permit conferred upon petitioner

an entitlement to harvest the 749 acres that had first

been disturbed before the passage of the state wetlands

protection law. /d. at 12a-15a, 19a; see pp. 6-7, supra.

Approximately one year later, the district court de-

cided the question, reserved in its January 2000 opin-

ion, concerning the status of the 749 acres. Pet. App.

3a-9a. The court rejected petitioner’s contention that

the court of appeals’ decision on the earlier appeal had

established that those acres were not subject to federal

regulation. The court explained that the prior Sixth

Circuit decision “simply said that the sign-off by the

[EPA] on the draft permit was final agency action and

that this Court had subject matter jurisdiction. The

Court.of Appeals did not comment on the merits of the

complaint.” Jd. at 4a. The court further observed:

EPA’s final agency action was merely to agree to

the text of the draft permit. The draft permit,

however, was subject to limitations and conditions.

If any limitation or condition of the draft permit was

changed, there was no longer agreement on the part

of EPA. [Petitioner’s] refusal to sign the draft per-

mit effectively meant that there was no permit.

[Petitioner’s] administrative appeal under [state

law] is an effort to change the limitations and condi-

tions of the draft permit. If [petitioner] is successful

in the administrative appeal, the end result will be a

recommendation to the director of [the DEQ]. If the

director accepts any changes recommended through

the administrative proceeding, the permit which

issued will contain different limitations and condi-

tions than those to which EPA consented. Effec-

tively, [petitioner] will not have a valid permit be-

cause EPA did not * * * approve it. The refusal to

sign the draft permit vitiated the EPA’s consent.

Id. at 4a-5a. The district court concluded that “{t]here

is nothing in the Clean Water Act, 33 U.S.C. § 1251, et

seq., or in the delegation to the state under section

404(a), 40 C.F.R. § 233.70, to exempt from regulation

the 749 acres.” Id. at 6a.

6. The court of appeals affirmed. Pet. App. la-2a.

Petitioner did not challenge the district court’s ruling

that authority to issue a CWA permit was legally

transferred to the Corps of Engineers when the State

elected to include, in the “state-only” permit, provisions

that were inconsistent with EPA’s previously stated

objections. Petitioner instead contended that the dis-

trict court’s decision on remand was inconsistent with

the court of appeals’ earlier ruling, which petitioner

characterized as a binding determination that the 749

acres were exempt from regulation under the Clean

Water Act. See Pet. C.A. Br. 22-28; Pet. App. 2a. The

court of appeals stated: “We have reviewed the rea-

soning of the district court and now AFFIRM.” /bid.

ARGUMENT

Petitioner contends (Pet. 14) that “the Sixth Circuit’s

decision conflicts with decades of this Court’s precedent

holding that government agencies must strictly follow

their procedural rules.” That argument is without

merit. Nothing in the court of appeals’ decision sug-

gests that the court viewed the Corps or EPA as hav-

ing breached any pertinent federal regulation, or that

the court would have condoned such a breach. Indeed,

petitioner did not argue in the court of appeals that any

violation of agency rules had occurred. The petition for

certiorari should therefore be denied.

1. The court of appeals simply stated: “We have

reviewed the reasoning of the district court and now

AFFIRM.” Pet. App. 2a. In arguing that the court of

appeals condoned an EPA violation of the agency’s own

rules, petitioner relies primarily (see Pet. 19, 22) on the

district court’s statement that “there is no compelling

reason to bar the transfer of authority [from state to

federal officials] beyond this 90 day period.” Pet. App.

l6a. Petitioner characterizes that statement as an

indication that “the courts below saw ‘no compelling

reason’ for EPA to follow its controlling regulations.”

Pet. 22. Careful examination of the relevant passage,

however, makes clear that petitioner has misread the

district court’s opinion.

In holding that the Corps had properly assumed

regulatory authority over petitioner’s CWA Section 404

application after the DEQ granted a superseding

“state-only” permit, the district court explained:

While it is true that the State here did satisfy the

EPA’s objections during the 90 day period as to the

March 1995 permit, and only later issued the state-

only permit which failed to conform to the EPA’s

objections, there is no compelling reason to bar the

transfer of authority beyond this 90 day period. The

state-only permit constituted a second permit

decision.

Pet. App. 16a (emphasis added). As the italicized lan-

guage makes clear, this passage does not suggest that

EPA or the Corps may ignore the requirement, stated

both in the governing regulations and in 33 U.S.C.

1344(j) itself, that EPA must raise any objections to a

permit application filed with state authorities within 90

days after EPA receives the application from the State.

Rather, the district court held that permitting author-

ity had been transferred from DEQ to the Corps in

June 1997, notwithstanding the expiration of “the 90

day period as to the March 1995 permit,” because “[t]he

state-only permit constituted a second permit decision.”

Pet. App. 16a. The thrust of the district court’s analysis

was that the transfer of authority occurred by opera-

tion of law when DEQ issued a permit that did not con-

form to EPA’s previously stated objections. See ibid.

(district court notes that “under § 404(j) of the CWA

[33 U.S.C. 1344()] the authority to issue § 404 permits

is transferred from a state back to the Corps as a

matter of law wherever a state has failed within the

time prescribed by law to amend its proposed permit to

conform to objections raised by the EPA”). As we

explain below (see pp. 14-16, infra), that conclusion is

correct. But even if the district court’s analysis were

open to question, there would be no basis for inferring

that the court deliberately condoned an agency breach

of its own regulation.

2. The fact that petitioner failed to present its

current arguments to the court of appeals provides an

independent reason for this Court to deny review. In

the court of appeals, petitioner did not cite United

States ex rel. Accardi v. Shaughnessy, 347 U.S. 260

(1954); petitioner did not contend that the district court

had countenanced an agency’s breach of its own regula-

tion; indeed, petitioner did not even contend that a

breach of agency rules had occurred. This Court ordi-

narily does not consider issues neither raised before nor

considered by the court of appeals. See, e.g., Penn-

sylvania Dept. of Corrs. v. Yeskey, 524 U.S. 206, 212-

213 (1998) (collecting cases). In addition, petitioner’s

failure to allege in the court of appeals that the agency

had breached its own rules further undermines peti-

tioner’s current contention that the Sixth Circuit im-

plicitly authorized such an agency violation.

3. In contending that “EPA ignored the strictures of

its governing regulations” when it informed petitioner

and the DEQ that permitting authority had been trans-

ferred to the Corps in June 1997, petitioner states that

“Michigan issued a final Section 404 permit” in March

1995, leaving EPA with “no further role to play.” Pet.

18. As the district court correctly recognized, however,

the March 1995 proposed permit never became “final”

because petitioner failed to sign the permit within the

specified time. Pet. App. 13a; see C.A. App. 111 (March

1995 proposed permit states that the “permit shall

become valid on the date of signature by the permit-

tee”); id. at 101 (DNR cover letter states that “[t]his

permit is not valid until it is signed by the permittee”).

Moreover, EPA’s withdrawal of objections to the

March 1995 propssed permit was made subject to the

express “condition that the final permit not differ

materially from this draft.” Jd. at 97. EPA stated at

that time that “(i]f there are substantive changes to this

draft decision by MDNR, we would need to review

these changes to determine whether or not they are

material to us.” /bid. EPA thus anticipated the possi-

bility that further exchanges between petitioner and

DEQ might result in additional amendments to the

permit, and it made clear that any such changes would

be subject to federal agency review. There is conse-

quently no basis for petitioner’s contention that EPA’s

conditional withdrawal of objections to the March 1995

proposed permit precluded the Corps from asserting

authority over the Section 404 program after (a) peti-

tioner refused to sign the proposed permit and (b) the

DEQ issued a “state-only” permit containing substan-

tially different terms.

The CWA provides that if the State fails to resubmit

a permit to which EPA has objected, revised to meet

EPA’s objections within 30 days, “the Secretary [of the

Army] may issue the permit.” 33 U.S.C. 1344(j). The

regulations similarly provide that “[iJn the event that

the Director [of the pertinent state agency] neither

satisfies EPA’s objections or requirements for a permit

condition nor denies the permit, the Secretary [of the

Army] shall process the permit application.” 40 C.F.R.

233.50(j). Because the “state-only” permit issued by

the DEQ in this case did not conform to the objections

previously expressed by EPA, the effect of the regula-

tions was that permitting authority was transferred to

the Corps by operation of law. Indeed, the DEQ permit

itself made clear that it did not authorize work under

the CWA, see C.A. App. 123; Pet. App. 27a; pp. 7-8,

supra, and the accompanying cover letter indicated that

petitioner could “seek federal authorization for the pro-

ject directly from the U.S. Army Corps of Engineers,”

C.A. App. 173. And in any event, the application to

these unusual circumstances of a regulatory scheme

that currently affects only two States (Michigan and

New Jersey, see p. 4, supra) presents no issue of wide-

spread or recurring importance.

4. The petition repeatedly suggests that EPA en-

gaged in manipulative conduct in an effort to prevent

petitioner from asserting its rights under state law.

See, e.g., Pet. 18 (“The agency’s machinations scuttled

[petitioner’s] administrative appeal and takings action

and forced the company to start the Section 404 process

all over again.”). The record does not support that as-

sertion. Indeed, EPA had no apparent motive (legiti-

mate or otherwise) for bringing the state administra-

tive appeal to a halt.

As the district court explained,

[petitioner’s] administrative appeal under [state

law] is an effort to change the limitations and condi-

tions of the draft permit. If [petitioner] is successful

in the administrative appeal, the end result will be a

recommendation to the director of [the DEQ]. Ifthe

director accepts any changes recommended through

the administrative proceeding, the permit which

issued will contain different limitations and condi-

tions than those to which EPA consented. Effec-

tively, [petitioner] will not have a valid permit

because EPA did not * * * approve it. The refusal

to sign the draft permit vitiated the EPA’s consent.

Pet. App. 4a-5a. Thus, if the state administrative ap-

peal process had culminated in a decision favorable to

petitioner, EPA’s earlier conditional withdrawal of

objections to the March 1995 proposed permit would

not have required the agency to accede to the State’s

issuance of a substantively different permit. As the

district court recognized (id. at 16a-17a), the fact that

Michigan’s permitting process includes an administra-

tive appeal mechanism does not alter the directive

contained in 40 C.F.R. 233.50(j) that if the State

ultimately fails either to satisfy EPA’s objections or to

deny the permit, authority to process the permit is

transferred to the Corps.

There is also no basis for petitioner’s repeated asser-

tions (see, e.g., Pet. 9-10) that the responsible federal

and state agencies colluded to subject petitioner to an

unfair result. The DEQ’s reasons for granting a broad

“state-only” permit are not altogether clear. The dis-

trict court suggested that the State had “tak[en] a

guarded approach to [petitioner’s] takings action” be-

cause it had “recently suffer[ed] a huge verdict against

it in a takings case.” Pet. App. 16a. DEQ’s issuance of

the “state-only” permit had the effect, and perhaps the

purpose, of reducing the State’s potential exposure to

takings liability by making clear that the federal gov-

ernment posed the only barrier to petitioner’s proposed

peat-mining activities. See United States v. Bay-

Houston Towing Co., No. 98-73252, 2002 WL 537630, at

*30 (E.D. Mich. Mar. 13, 2002) (noting “the acute con-

cerns in DEQ over the taking action in the Court of

Claims and the desire of DEQ to issue a state permit to

obviate any claim against the State of Michigan for a

taking”). But whatever the reasons for the State’s deci-

sion, the Corps’ assertion of permitting authority was a

reasonable response, and one consistent with the appli-

cable provisions of the statutory and regulatory

scheme.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.