Volume 1 of 2

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

OHIO VALLEY ENVIRONMENTAL 

COALITION; COAL RIVER MOUNTAIN

WATCH; WEST VIRGINIA HIGHLANDS

CONSERVANCY,

Plaintiffs-Appellees,

and

COAL MAC, INCORPORATED,

Movant,

v.

ARACOMA COAL COMPANY; ELK

RUN COAL COMPANY; ALEX

ENERGY, INCORPORATED;

INDEPENDENCE COAL COMPANY,  No. 07-1355

INCORPORATED,

Intervenors/Defendants-Appellants,

and

MINGO LOGAN COAL COMPANY,

Intervenor/Defendant,

and

UNITED STATES ARMY CORPS OF

ENGINEERS; LIEUTENANT GENERAL

ROBERT L. VAN ANTWERP,

Commander and Chief of

Engineers, U. S. Army Corps of

Engineers; 

Certiorari dismissed, August 19, 2010
COLONEL DANA R. HURST, District 

Engineer, United States Army

Corps of Engineers, Huntington

District; WEST VIRGINIA COAL

ASSOCIATION,

Defendants.

NATIONAL MINING ASSOCIATION;

KENTUCKY COAL ASSOCIATION;

COAL OPERATORS AND ASSOCIATES,

INC.; ILLINOIS COAL ASSOCIATION;

COLORADO MINING ASSOCIATION; 

ALASKA MINERS ASSOCIATION;

VIRGINIA COAL ASSOCIATION; IDAHO

MINING ASSOCIATION; ALABAMA

COAL ASSOCIATION; PENNSYLVANIA

COAL ASSOCIATION; OHIO COAL

ASSOCIATION; INDIANA COAL

COUNCIL, INC.; UTILITY WATER ACT

GROUP; WEST VIRGINIA

DEPARTMENT OF COMMERCE; WEST

VIRGINIA DEPARTMENT OF

ENVIRONMENTAL PROTECTION,

Amici Supporting Appellants. 

2 OHIO VALLEY v. ARACOMA COAL CO.
OHIO VALLEY ENVIRONMENTAL 

COALITION; COAL RIVER MOUNTAIN

WATCH; WEST VIRGINIA HIGHLANDS

CONSERVANCY,

Plaintiffs-Appellees,

and

COAL MAC, INCORPORATED; FRASURE

CREEK MINING, LLC,

Movants,

v.

UNITED STATES ARMY CORPS OF

ENGINEERS; LIEUTENANT GENERAL

ROBERT L. VAN ANTWERP,

 No. 07-1479 Commander and Chief of

Engineers, U. S. Army Corps of

Engineers; COLONEL DANA R.

HURST, District Engineer, United

States Army Corps of Engineers,

Huntington District,

Defendants-Appellants,

and

WEST VIRGINIA COAL ASSOCIATION,

Defendant,

and

ARACOMA COAL COMPANY; ELK

RUN COAL COMPANY; 

OHIO VALLEY v. ARACOMA COAL CO. 3
ALEX ENERGY, INCORPORATED; 

INDEPENDENCE COAL COMPANY,

INCORPORATED; MINGO LOGAN COAL

COMPANY,

Intervenors/Defendants.

NATIONAL MINING ASSOCIATION;

KENTUCKY COAL ASSOCIATION;

COAL OPERATORS AND ASSOCIATES,

INC.; ILLINOIS COAL ASSOCIATION;

COLORADO MINING ASSOCIATION;

ALASKA MINERS ASSOCIATION; 

VIRGINIA COAL ASSOCIATION; IDAHO

MINING ASSOCIATION; ALABAMA

COAL ASSOCIATION; PENNSYLVANIA

COAL ASSOCIATION; OHIO COAL

ASSOCIATION; INDIANA COAL

COUNCIL, INC.; UTILITY WATER ACT

GROUP; WEST VIRGINIA

DEPARTMENT OF COMMERCE; WEST

VIRGINIA DEPARTMENT OF

ENVIRONMENTAL PROTECTION,

Amici Supporting Appellants. 

4 OHIO VALLEY v. ARACOMA COAL CO.
OHIO VALLEY ENVIRONMENTAL 

COALITION; COAL RIVER MOUNTAIN

WATCH; WEST VIRGINIA HIGHLANDS

CONSERVANCY,

Plaintiffs-Appellees,

and

COAL MAC, INCORPORATED; FRASURE

CREEK MINING, LLC,

Movants,

v.

WEST VIRGINIA COAL ASSOCIATION,

Defendant-Appellant,  No. 07-1480

and

UNITED STATES ARMY CORPS OF

ENGINEERS; LIEUTENANT GENERAL

ROBERT L. VAN ANTWERP,

Commander and Chief of

Engineers, U. S. Army Corps of

Engineers; COLONEL DANA R.

HURST, District Engineer, United

States Army Corps of Engineers,

Huntington District,

Defendants,

and 

OHIO VALLEY v. ARACOMA COAL CO. 5
ARACOMA COAL COMPANY; ELK 

RUN COAL COMPANY; ALEX

ENERGY, INCORPORATED;

INDEPENDENCE COAL COMPANY, 

INCORPORATED; MINGO LOGAN COAL

COMPANY,

Intervenors/Defendants. 

OHIO VALLEY ENVIRONMENTAL 

COALITION; COAL RIVER MOUNTAIN

WATCH; WEST VIRGINIA HIGHLANDS

CONSERVANCY,

Plaintiffs-Appellees,

v.

UNITED STATES ARMY CORPS OF

ENGINEERS; CARL A. STROCK,

Commander and Chief of  No. 07-1964

Engineers, U. S. Army Corps of

Engineers; WILLIAM BULEN,

Colonel, District Engineer, U. S.

Army Corps of Engineers,

Huntington District; WEST

VIRGINIA COAL ASSOCIATION,

Defendants,

and 

6 OHIO VALLEY v. ARACOMA COAL CO.
COAL MAC, INCORPORATED; MINGO 

LOGAN COAL COMPANY; FRASURE

CREEK MINING, LLC; JUPITER

HOLDINGS LLC,

Intervenors/Defendants,

and 

ARACOMA COAL COMPANY; ELK

RUN COAL COMPANY; ALEX

ENERGY, INCORPORATED;

INDEPENDENCE COAL COMPANY,

INCORPORATED,

Intervenors/Defendants-Appellants. 

OHIO VALLEY ENVIRONMENTAL 

COALITION; COAL RIVER MOUNTAIN

WATCH; WEST VIRGINIA HIGHLANDS

CONSERVANCY,

Plaintiffs-Appellees,

v.

UNITED STATES ARMY CORPS OF

ENGINEERS; ROBERT L. VAN  No. 07-2112

ANTWERP, Commander and Chief

of Engineers, U. S. Army Corps

of Engineers; DANA R. HURST,

District Engineer, United States

Army Corps of Engineers,

Huntington District,

Defendants-Appellants,

and 

OHIO VALLEY v. ARACOMA COAL CO. 7
WEST VIRGINIA COAL ASSOCIATION, 

Defendant,

and

ARACOMA COAL COMPANY; ELK

RUN COAL COMPANY; ALEX

ENERGY, INCORPORATED;

INDEPENDENCE COAL COMPANY,

INCORPORATED; MINGO LOGAN COAL

COMPANY; COAL MAC,

INCORPORATED; FRASURE CREEK

MINING, LLC; JUPITER HOLDINGS

LLC,

Intervenor/Defendant.

ALABAMA COAL ASSOCIATION;

ALASKA MINERS ASSOCIATION; COAL 

OPERATORS AND ASSOCIATES,

INCORPORATED; COLORADO MINING

ASSOCIATION; IDAHO MINING

ASSOCIATION; ILLINOIS COAL

ASSOCIATION; INDIANA COAL

COUNCIL; KENTUCKY COAL

ASSOCIATION; NATIONAL MINING

ASSOCIATION; OHIO COAL

ASSOCIATION; PENNSYLVANIA COAL

ASSOCIATION; UTILITY WATER ACT

GROUP; VIRGINIA COAL

ASSOCIATION; WEST VIRGINIA

DEPARTMENT OF COMMERCE; WEST

VIRGINIA DEPARTMENT OF

ENVIRONMENTAL PROTECTION,

Amici Supporting Appellants. 

8 OHIO VALLEY v. ARACOMA COAL CO.
Appeals from the United States District Court

for the Southern District of West Virginia, at Huntington.

Robert C. Chambers, District Judge.

(3:05-cv-00784; 3:06-cv-00438)

Argued: September 23, 2008

Decided: February 13, 2009

Before MICHAEL, GREGORY, and SHEDD,

Circuit Judges.

Reversed, vacated and remanded by published opinion. Judge

Gregory wrote the opinion, in which Judge Shedd joined.

Judge Michael wrote a separate opinion dissenting in part and

concurring in part.

COUNSEL

ARGUED: Robert G. McLusky, JACKSON KELLY,

P.L.L.C., Charleston, West Virginia; Michael Thomas Gray,

UNITED STATES DEPARTMENT OF JUSTICE, Environment & Natural Resources Division, Washington, D.C., for

Appellants. Joseph Mark Lovett, APPALACHIAN CENTER

FOR THE ECONOMY & THE ENVIRONMENT, Lewisburg, West Virginia, for Appellees. ON BRIEF: James R.

Snyder, Blair M. Gardner, JACKSON KELLY, P.L.L.C.,

Charleston, West Virginia; Michael R. Shebelskie, William

H. Wright, Jr., HUNTON & WILLIAMS, L.L.P., Richmond,

Virginia, for Intervenors/Appellants Aracoma Coal Company,

Elk Run Coal Company, Alex Energy, Incorporated, Independence Coal Company, Incorporated; James S. Crockett, Jr.,

Allyn G. Turner, James C. Lesnett, Jr., SPILMAN THOMAS

& BATTLE, P.L.L.C., Charleston, West Virginia, for AppelOHIO VALLEY v. ARACOMA COAL CO. 9
lant West Virginia Coal Association. Ronald J. Tenpas, Acting Assistant Attorney General, UNITED STATES

DEPARTMENT OF JUSTICE, Environment & Natural

Resources Division, Washington, D.C., for Appellants United

States Army Corps of Engineers, Robert L. Van Antwerp,

Commander and Chief of Engineers, U.S. Army Corps of

Engineers, Dana R. Hurst, District Engineer, United States

Army Corps of Engineers, Huntington District. James M.

Hecker, PUBLIC JUSTICE, Washington, D.C.; Stephen E.

Roady, Jennifer C. Chavez, EARTHJUSTICE, Washington,

D.C., for Appellees Ohio Valley Environmental Coalition,

Coal River Mountain Watch, West Virginia Highlands Conservancy. Harold P. Quinn, Jr., Karen Bennett, NATIONAL

MINING ASSOCIATION, Washington, D.C.; Christopher T.

Handman, Dominic F. Perella, HOGAN & HARTSON,

L.L.P., Washington, D.C., for Alabama Coal Association,

Alaska Miners Association, Coal Operators and Associates,

Incorporated, Colorado Mining Association, Idaho Mining

Association, Illinois Coal Association, Indiana Coal Council,

Kentucky Coal Association, National Mining Association,

Ohio Coal Association, Pennsylvania Coal Association, Virginia Coal Association, Amici Supporting Appellants. James

N. Christman, Brooks M. Smith, HUNTON & WILLIAMS,

L.L.P., Richmond, Virginia; Kristy A. N. Bulleit, HUNTON

& WILLIAMS, L.L.P., Washington, D.C., for Utility Water

Act Group, Amicus Supporting Appellants. William R.

Valentino, Assistant Attorney General, WEST VIRGINIA

ATTORNEY GENERAL’S OFFICE, Charleston, West Virginia; Thomas L. Clarke, Senior Counsel, WEST VIRGINIA

DEPARTMENT OF ENVIRONMENTAL PROTECTION,

Office of Legal Services, Charleston, West Virginia, for West

Virginia Department of Commerce and West Virginia Department of Environmental Protection, Amici Supporting Appellants.

10 OHIO VALLEY v. ARACOMA COAL CO.
OPINION

GREGORY, Circuit Judge:

This appeal concerns a challenge by Plaintiffs-Appellees

Ohio Valley Environmental Coalition, the Coal River Mountain Watch, and the West Virginia Highlands Conservancy

(hereinafter referred to collectively as "OVEC") to the U.S.

Army Corps of Engineers ("Corps") issuance of four permits

allowing the filling of West Virginia stream waters in conjunction with area surface coal mining operations. Granting

judgment for OVEC, the district court rescinded the permits

as violations of the Clean Water Act ("CWA"), 33 U.S.C.

§ 1251 et seq. (2000), the National Environmental Policy Act

("NEPA"), 42 U.S.C. § 4321 et seq. (2000), and the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq. (2000).

The court also enjoined all activity under those permits and

remanded to the Corps for further proceedings consistent with

its order.

Separately, in an order dated June 13, 2007, the district

court provided declaratory relief to OVEC, holding that the

stream segments linking the permitted fills to downstream

sediment treatment ponds were "waters of the United States"

and that the Corps lacked authority under the CWA to permit

discharge from the fills into the stream segments.

The Corps now appeals these two orders. For the reasons

set forth below, we reverse and vacate the district court’s

opinion and order of March 23, 2007, and vacate the district

court’s injunction. We also reverse the district court’s June

13, 2007, grant of declaratory relief and we remand for further

proceedings consistent with this opinion.

I.

The mountaintop removal method of surface coal mining,

pioneered in West Virginia, involves the blasting of the soil

OHIO VALLEY v. ARACOMA COAL CO. 11
and rock atop a mountain to expose coal deposits below.

While mining operations are ongoing, the overburden is

hauled or pushed into adjacent valleys. This excavated overburden is known as "spoil." Once the coal has been extracted,

efforts are made to re-contour the mountaintop by replacing

the removed overburden, but stability concerns limit the

amount of spoil that can be returned to the area. In its natural

state, the spoil material is heavily compacted; once excavated,

however, the loosening of the rock and soil and incorporation

of air causes significant swelling. As a result, large quantities

of the blasted material cannot be replaced, and this excess

spoil ("overburden") remains in the valley, creating a "valley

fill" that buries intermittent and perennial streams in the process.

Water that collects in the fill must be moved out to ensure

the fill’s continued stability. Thus, an underdrain system is

constructed by placing large boulders up to and above the

ordinary high-water mark of the stream. The collected water

is then channeled into a treatment pond, where sediment from

the runoff is allowed to settle. Sediment ponds usually are

constructed in existing streambeds, using earth and rock to

create an embankment. After sediments have settled out of the

fill runoff, the treated water is discharged from the sediment

pond back into existing streams. When practicable, a sediment

pond will be constructed in the streambed immediately adjacent to the end (or "toe") of the fill. But, because West Virginia’s steep, mountainous topography often prevents this kind of

positioning, a short stream segment is frequently used to

move runoff from the fill downstream to the sediment pond.

Once a valley fill is stabilized, the embankments of the sediment pond are removed, and the ponds and the stream segments are restored to their pre-project condition.

Much of the impact of a valley fill project is felt by headwater streams. Headwater streams are small streams that form

the origin of larger streams or rivers, and may be intermittent

or ephemeral. Intermittent streams receive their flow from

12 OHIO VALLEY v. ARACOMA COAL CO.
both surface runoff and groundwater discharge, while ephemeral streams rely on major rain or snow events for their flow.

The precise role of headwater streams in overall watershed

ecology is a matter of some debate in this litigation, as we discuss more below, but all parties agree that these streams perform important ecological functions.

OVEC initiated this challenge in September 2005 in the

United States District Court for the Southern District of West

Virginia, shortly after the Corps issued an individual valley

fill permit and accompanying Combined Decision Document

("CDD") to the Aracoma Coal Company for the Camp Branch

Surface Mine project ("Camp Branch") under its CWA § 404

authority.1 As the Corps issued subsequent § 404 permits to

West Virginia mining operations, the district court allowed

OVEC to amend its complaint several times to include the

newly issued permits.

In addition to the Camp Branch permit, OVEC’s Third

Supplemental Complaint raised challenges to the individual

§ 404 permits issued to the Elk Run Coal Company for the

Black Castle Mine ("Black Castle"), and to Alex Energy, Inc.,

for the Republic No. 1 and Republic No. 2 Surface Mines

("Republic No. 1" and "Republic No. 2"). The Republic No.

1 challenge was ultimately dismissed on ripeness grounds, but

a challenge raised in a separate complaint to the individual

permit issued to Independence Coal Company for the Laxare

East Surface Mine ("Laxare East") was consolidated with this

proceeding. Each of the affected companies intervened as

1Mine operators may seek a general § 404 permit for the discharge of

fill material "on a State, regional, or nationwide basis" if their activities

"will cause only minimal adverse effects when performed separately, and

will have only minimal cumulative adverse effect on the environment." 33

U.S.C. § 1344(e)(1)(2000). For fill activities that do not meet the requirements for a general permit, the Corps issues individual § 404 permits for

discharges at "specified disposal sites" on a case-by-case basis. 33 U.S.C.

§ 1344(a)(2000); Ohio Valley Envtl. Coal. v. Bulen, 429 F.3d 493, 496

(4th Cir. 2005). 

OHIO VALLEY v. ARACOMA COAL CO. 13
defendants in the action, as did the West Virginia Coal Association.

All together, the four challenged permits authorize the creation of 23 valley fills and 23 sediment ponds, and they

impact 68,841 linear feet of intermittent and ephemeral

streams, or just over 13 miles.2 For each of the four permits,

the Corps prepared Environmental Assessments that concluded that the permitted activity would not result in significant environmental impacts given planned mitigation

measures. On that basis, the Corps issued a "Finding of No

Significant Impact" for all four permits.

OVEC’s Third Supplemental Complaint charged that the

Corps’ issuance of the § 404 fill permits for these mining

projects violated both substantive and procedural provisions

of the CWA and NEPA, and were "arbitrary, capricious, and

an abuse of discretion" under the APA. According to OVEC,

the Corps was required under NEPA to prepare an Environmental Impact Statement for each of the projects before issuing a permit, given the significant individual and cumulative

adverse effects the projects would have on water quality,

aquatic and terrestrial ecosystems and habitats, species survival and diversity, crucial stream functions, forests, and the

aesthetic value of the destroyed mountains. Similarly, OVEC

claimed that the Corps failed to properly determine the

2The Camp Branch project includes 4 fills impacting 15,059 linear feet

of intermittent and ephemeral streams, and 4 associated sediment ponds

that would temporarily impound an additional 455 linear feet of intermittent streams. The Black Castle project includes 9 valley fills impacting

13,401 linear feet of intermittent and ephemeral streams, and 6 associated

sediment ponds, temporarily impounding an additional 879 linear feet of

intermittent streams. Republic No. 2’s project includes 3 valley fills

impacting 9,918 linear feet of intermittent and ephemeral streams, and 3

associated sediment ponds temporarily impounding an additional 690 linear feet of intermittent streams. Finally, the Laxare East project involves

7 valley fills, impacting 24,860 linear feet of intermittent and ephemeral

streams, and 10 associated sediment ponds temporarily impounding an

additional 3,099 linear feet of intermittent and ephemeral streams. 

14 OHIO VALLEY v. ARACOMA COAL CO.
adverse individual and cumulative impacts to the affected

aquatic ecosystems in accordance with the CWA and the

Corps’ CWA Guidelines.

Trial in the case was originally scheduled for June 20,

2006, but on June 16, on the Corps’ motion, the district court

remanded the permits to the Corps and stayed the proceedings. Almost a month later, the Corps reissued the permits,

but this time with a supplemented administrative record that

incorporated new comments from the public and the parties,

including the reports prepared by OVEC’s proposed expert

witnesses. The district court lifted its stay on July 26, and a

six-day bench trial was held in October 2006.

The district court granted judgment in favor of the plaintiffs

on March 23, 2007, rescinding the permits, enjoining the

Corps and Intervenors from taking any action under those permits, and remanding the permits to the Corps for further proceedings consistent with the court’s order.3

The district court found, inter alia, that the probable

impacts of the valley fills would be significant and adverse

under both the CWA and NEPA; that the mitigation plans for

each permit were not sufficient to compensate for those

adverse impacts; that, in each permit, the Corps improperly

limited its scope of review under NEPA to look only at the

impact on jurisdictional waters rather than the broader impact

of the entire valley fill project; and, finally, that the Corps

inadequately evaluated the cumulative impacts of the projects.

On June 13, 2007, the district court granted summary judgment to OVEC on a separate claim under which the plaintiffs

sought a declaratory judgment that the stream segments running from the valley fill toes to the sediment pond embank3The court later granted Intervenors’ request for a limited stay of the

injunctions for some of the fills, provided that Intervenors complied with

all conditions, including mitigation requirements, of the permits. 

OHIO VALLEY v. ARACOMA COAL CO. 15
ments are "waters of the United States," and that the Corps

thus did not have authority to permit the discharge of pollutants into these segments with a CWA § 404 permit. According to the district court, mining operators who wished to

discharge runoff from the fill into a stream segment needed to

obtain a CWA § 402 permit from the EPA or proper state

authority. On September 13, 2007, the district court granted,

pursuant to Federal Rule of Civil Procedure 54(b), the Intervenors’ motion for entry of final judgment on the June 13 order.4

The Corps and Intervenors filed timely notices of appeal from

both the March 23 and June 13 orders.

On appeal, the Corps contends that it is entitled to deference on its determination about the scope of its NEPA analysis and that its findings on individual and cumulative impacts

and mitigation were not arbitrary or capricious. The agency

further argues that its interpretation of its CWA regulations—treating stream segments and sediment ponds as part

of a unitary waste treatment system and thus excepting them

from separate CWA § 402 permitting—was entitled to deference. Intervenors have raised these same challenges to the district court’s ruling, but also argue that OVEC’s stream

segment claim was barred in the first place under principles

of res judicata. OVEC has also filed two motions for judicial

notice, asking this Court to take notice of five new permits

that the Corps has issued since the district court’s orders were

entered.

II.

We review de novo a district court’s findings on an administrative record. See Crutchfield v. County of Hanover, 325

F.3d 211, 217 (4th Cir. 2003). This de novo standard applies

to questions of both law and fact. See id.

4The court also granted a motion by the Intervenors to stay the effect

of the June 13 order pending appeal. 

16 OHIO VALLEY v. ARACOMA COAL CO.
Both NEPA and CWA claims are subject to judicial review

under the APA, 5 U.S.C. § 706 (2006). For all agency actions,

a reviewing court must set aside the action if it is found to be

"arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law." 5 U.S.C. § 706(2)(A) (2006); Citizens To Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,

413-14 (1971).

III.

A complex statutory framework undergirds the regulation

of valley fills and associated sediment ponds, and it is this

framework that provides the foundation for our opinion. Thus,

we begin with a brief overview of the relationship of the four

statutes that affect the scope of the Corps’ authority to issue

fill permits in connection with mountaintop coal mining operations: the Surface Mining Control and Reclamation Act of

1977 ("SMCRA"), 30 U.S.C. § 1201 et seq. (2000), the CWA,

NEPA, and the APA.

A.

Congress passed SMCRA in 1977 to "establish a nationwide program to protect society and the environment from the

adverse effects of surface coal mining operations." 30 U.S.C.

§ 1202(a) (2000). Congress also recognized a need, however,

to "strike a balance between protection of the environment

and agricultural productivity and the Nation’s need for coal as

an essential source of energy." 30 U.S.C. § 1202(f) (2000). In

striking this balance, SMCRA utilizes a "cooperative federalism" approach, allocating responsibility for the regulation of

surface coal mining among both state and federal agencies.

Bragg v. W. Va. Coal Ass’n, 248 F.3d 275, 288 (4th Cir.

2001).

Under SMCRA, states have "exclusive jurisdiction over the

regulation of surface coal mining and reclamation operations"

on non-Federal lands, so long as their regulatory program has

OHIO VALLEY v. ARACOMA COAL CO. 17
been approved by the Secretary of the Interior as satisfying

the Act’s minimum requirements.5 30 U.S.C. § 1253 (2000).

Once a state’s SMCRA program has been approved, anyone

wishing to engage in surface coal mining operations within

the state must first obtain a permit from the state’s regulatory

authority.6 30 U.S.C. § 1256(a) (2000). In West Virginia, the

federally approved regulatory authority is the Department of

Environmental Protection ("WVDEP").

Regulation of the disposal of excess spoil material from

surface coal mining operations is within SMCRA’s purview.

As part of its environmental protection performance standards, SMCRA requires that all excess spoil material from

surface mining operations be disposed of "in a controlled

manner . . . and in such a way to assure mass stability and to

prevent mass movement." 30 U.S.C. § 1265(b)(22)(A) (2000).

The Act clearly contemplates that valley fills will be used in

the disposal process. See 30 U.S.C. § 1265(b)(22)(D) (2000)

(requiring that, where the disposal area contains "springs, natural water courses, or wet weather seeps . . . lateral drains

[must be] constructed from the wet areas to the main underdrains in such a manner that filtration of the water into the

spoil pile will be prevented."); Kentuckians for the Commonwealth, Inc. v. Rivenburgh, 317 F.3d 425, 443 (4th Cir. 2003)

("[I]t is beyond dispute that SMCRA recognizes the possibility of placing excess spoil material in waters of the United

States . . . .").

B.

An SMCRA permit by itself, however, does not suffice to

allow a mine operator to construct a valley fill in conjunction

5States are free to adopt more stringent regulations than those mandated

by SMCRA. 30 U.S.C. § 1255(b) (2000). 

6Where a state does not have a federally approved SMCRA program in

place, surface mining operations within that state must be permitted by the

Secretary of the Interior. 30 U.S.C. § 1256 (2000). 

18 OHIO VALLEY v. ARACOMA COAL CO.
with its mountaintop removal activities. Mining companies

must also obtain permits certifying their project’s compliance

with the CWA. The CWA aims to "restore and maintain the

chemical, physical, and biological integrity of the Nation’s

waters" by eliminating "the discharge of pollutants into the

navigable waters." 33 U.S.C. § 1251(a)(2000). In the surface

mining context, three sections of the CWA are relevant to the

permitting process.

First, a mine operator applying for a federal permit under

the CWA must comply with CWA § 401, 33 U.S.C. § 1341

(2000), by providing the federal permitting agency with a certification from the proper state authority—in this case,

WVDEP—stating that any discharge from the mine site will

comply with all applicable water quality standards. Next, the

mine operator must obtain a National Pollutant Discharge

Elimination System ("NPDES") permit pursuant to CWA

§ 402, 33 U.S.C. § 1342 (2000), if their project involves the

discharge of a pollutant from a point source within the mining

operation into navigable waters.7 33 U.S.C. §§ 1342, 1362(12)

(2000). The CWA defines "navigable waters" as "the waters

of the United States, including the territorial seas." 33 U.S.C.

§ 1362(7) (2000). The release of treated waters from sediment

ponds back into a stream, for example, require a CWA § 402

NPDES permit.

States wishing to administer their own NPDES program

must be approved by the Environmental Protection Agency

("EPA") before they can begin issuing § 402 permits. 33

U.S.C. § 1342(c) (2000). West Virginia has had an EPAapproved § 402 program since 1982. See Approval of West

Virginia’s NPDES Program, 47 Fed. Reg. 22, 363 (May 24,

1982).

7A "point source" is "any discernible, confined and discrete conveyance,

including but not limited to any pipe, ditch, channel, tunnel, conduit, well,

discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may

be discharged." 33 U.S.C. § 1362(14) (2000). 

OHIO VALLEY v. ARACOMA COAL CO. 19
Finally, and most importantly for the purposes of this litigation, surface mining projects that intend to dispose of excess

spoil from their mining operations in jurisdictional waters

must obtain a CWA § 404, 33 U.S.C. § 1344 (2000), permit

from the Corps. Section 404 permits allow "the discharge of

dredged or fill material into the navigable waters at specified

disposal sites." 33 C.F.R. § 1344(a) (2008). The Corps uses

§ 404 permits to authorize the fill activity itself, as well as the

construction of downstream sediment ponds.8

In issuing § 404 permits, the Corps follows the § 404(b)(1)

Guidelines ("CWA Guidelines") promulgated by the Environmental Protection Agency ("EPA") pursuant to 33 U.S.C.

§ 1344(b)(1) (2008), and incorporated by the Corps into its

own regulations. See 40 C.F.R. pt. 230 (2008); 33 C.F.R.

§ 320.2(f) (2008). The Guidelines prohibit discharges that

"will cause or contribute to significant degradation of the

waters of the United States."9 40 C.F.R. § 230.10(c) (2008).

A discharge contributes to significant degradation if it has

"[s]ignificantly adverse effects" on human health or welfare,

on aquatic life and other wildlife dependent on aquatic ecosystems, on aquatic ecosystem diversity, productivity, and stability, or on recreational, aesthetic, and economic values. Id.

The Corps’ § 404 permit evaluation process must also

include a public interest review component, in which "[t]he

benefits which reasonably may be expected to accrue from the

proposal must be balanced against its reasonably foreseeable

detriments." 33 C.F.R. § 320.4(a)(1) (2008). The Corps’ decision to issue a permit "should reflect the national concern for

8

In Kentuckians for the Commonwealth, 317 F.3d 425, this Court

upheld the Corps’ interpretation of the term "fill material" to include coal

mining overburden as a permissible construction of CWA § 404. 

9

"Waters of the United States" include interstate waters and all waters

used (or that could potentially be used) in interstate commerce, and "[a]ll

other waters such as intrastate lakes, rivers, streams (including intermittent

streams) [et al.] . . . the use, degradation or destruction of which could

affect interstate or foreign commerce . . . ." 40 C.F.R. § 230.3(s) (2008).

20 OHIO VALLEY v. ARACOMA COAL CO.
both protection and utilization of important resources." Id.

Ultimately, the § 404 permitting process requires extensive

review and coordination with numerous federal and state

agencies, as well as significant consideration of the public

interest.

C.

Under NEPA, federal agencies must take a "hard look" at

the potential environmental consequences of their actions.

Robertson v. Methow Valley Citizens Council, 490 U.S. 332,

350 (1989). Because NEPA is a procedural and not a resultsdriven statute, even agency action with adverse environmental

effects can be NEPA-compliant so long as the agency has

considered those effects and determined that competing policy values outweigh those costs. Id.

NEPA requires only that federal agencies prepare an Environmental Impact Statement for "major Federal actions significantly affecting the quality of the human environment." 42

U.S.C. § 4332(2)(C) (2000). Significance is determined by

evaluating both the context of the action and the intensity, or

severity, of the impact. 40 C.F.R. § 1508.27 (2008). Where it

is not readily discernible how significant the environmental

effects of a proposed action will be, federal agencies may prepare an Environmental Assessment ("EA"). 40 C.F.R.

§ 1501.4(b) (2008). An EA is a "concise public document . . .

that serves to . . . [b]riefly provide sufficient evidence and

analysis for determining whether to prepare an [EIS] or a

finding of no significant impact [("FONSI")]." 40 C.F.R.

§ 1508.9(a)(1) (2008); see also 33 C.F.R. §§ 230.10-230.11

(2008) (explaining the Corps’ requirements for an EA).

Even where an EA determines that a proposed action will

have a significant environmental impact, an agency may

avoid issuing an EIS where it finds that mitigating measures

can be taken to reduce the environmental impact of the project

below the level of significance. Roanoke River Basin Ass’n v.

OHIO VALLEY v. ARACOMA COAL CO. 21
Hudson, 940 F.2d 58, 62 (4th Cir. 1991). In these situations,

the agency can issue a "so-called mitigated FONSI." Spiller

v. White, 352 F.3d 235, 241 (5th Cir. 2003) (internal quotations omitted).

D.

Claims challenging federal agency action under the CWA

and NEPA are subject to judicial review under the APA. 5

U.S.C. § 702 (2006); Holy Cross Wilderness Fund v. Madigan, 960 F.2d 1515, 1521 (10th Cir. 1992). In issuing the

§ 404 permits challenged here, the Corps was engaged in

informal ("notice and comment") rule-making. 33 U.S.C.

§ 1344(a) (2000); Ohio Valley Envtl. Coal. v. Bulen, 429 F.3d

493, 496 (4th Cir. 2005). Such informal rulemaking, done

pursuant to Section 4 of the APA, 5 U.S.C. § 553 (2006),

must be reviewed under Section 10 of the APA, 5 U.S.C.

§ 706(2) (2006). Ethyl Corp. v. EPA, 541 F.2d 1, 34 (D.C.

Cir. 1976).

Section 10 of the APA establishes that, as a general rule,

"agency action, findings, and conclusions" will be set aside

only when they are "found to be . . . arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with law."

5 U.S.C. § 706(2) (2000); Citizens To Preserve Overton Park,

Inc. v. Volpe, 401 U.S. 402, 413-14 (1971). Review under this

standard is highly deferential, with a presumption in favor of

finding the agency action valid. Natural Res. Def. Council,

Inc. v. EPA, 16 F.3d 1395, 1400 (4th Cir. 1993). Especially

in matters involving not just simple findings of fact but complex predictions based on special expertise, "a reviewing court

must generally be at its most deferential." Baltimore Gas &

Elec. Co. v. Natural Res. Def. Council, 462 U.S. 87, 103

(1983).

In determining whether agency action was arbitrary or

capricious, the court must consider whether the agency considered the relevant factors and whether a clear error of judg22 OHIO VALLEY v. ARACOMA COAL CO.
ment was made. Citizens To Preserve Overton Park, 401 U.S.

at 416. "Although this inquiry into the facts is to be searching

and careful, the ultimate standard of review is a narrow one.

The court is not empowered to substitute its judgment for that

of the agency." Id. Deference is due where the agency has

examined the relevant data and provided an explanation of its

decision that includes "a ‘rational connection between the

facts found and the choice made.’" Motor Vehicle Mfrs. Ass’n

v. State Farm Mutual Auto Ins. Co., 463 U.S. 29, 43 (1983)

(quoting Burlington Truck Lines, Inc. v. United States, 371

U.S. 156, 168 (1962)); accord Ohio River Valley Envtl. Coal.,

Inc. v. Kempthorne, 473 F.3d 94, 102-03 (4th Cir. 2006).

The "arbitrary and capricious" standard is not meant to

reduce judicial review to a "rubber-stamp" of agency action.

Ethyl Corp., 541 F.2d at 34. While the standard of review is

narrow, the court must nonetheless engage in a "searching and

careful" inquiry of the record. Citizens To Preserve Overton

Park, 401 U.S. at 416. But, this scrutiny of the record is

meant primarily "to educate the court" so that it can "understand enough about the problem confronting the agency to

comprehend the meaning of the evidence relied upon and the

evidence discarded; the questions addressed by the agency

and those bypassed; the choices open to the agency and those

made." Ethyl Corp., 541 F.2d at 36.

IV.

With this statutory guidance in mind, we turn now to the

substance of this appeal, first taking up the issues on appeal

concerning the district court’s March 23, 2007, opinion and

order.10

10In their appeal of the March 23 opinion and order, the Intervenors

have questioned OVEC’s standing to challenge the Republic No. 2 permit.

Intervenors claim that organizational standing is inappropriate because no

member of the three plaintiff organizations has sustained an "injury in

fact" as a result of the Corps’ § 404 permitting with respect to Republic

No. 2. 

OHIO VALLEY v. ARACOMA COAL CO. 23
A.

The Corps and Intervenors (collectively "Appellants")

claim on appeal that the Corps’ decision about the scope of

its NEPA analysis for each of these permits was entitled to

deference as a reasonable interpretation of its own regulations. The district court found that the Corps acted contrary to

its regulations by limiting the scope of its NEPA analysis to

the impact of the filling of jurisdictional waters and by not

looking at the larger environmental impacts of the valley fill

as a whole. Agreeing with the district court, OVEC argues

that the Corps’ NEPA analysis should have considered all

environmental impacts caused by the fill, including the

impacts to the upland valleys where the fills will be located.

The Corps counters that it reasonably determined that, under

its regulations, its jurisdictional reach was limited to the

affected waters and adjacent riparian areas and that this determination is entitled to deference.

Because we are asked here to review the Corps’ interpretation of its own regulations, our review is cabined to assessing

the reasonableness of that interpretation. This kind of review

is highly deferential, with the agency’s interpretation "con-

"[E]nvironmental plaintiffs adequately allege injury in fact when they

aver that they use the affected area and are persons ‘for whom the aesthetic and recreational values of the area will be lessened’ by the challenged activity." Friends of the Earth, Inc. v. Laidlaw Environmental

Services, 528 U.S. 167, 183 (2000) (quoting Sierra Club v. Morton, 405

U.S. 727, 735 (1972)). As the district court determined below, one of

OVEC’s members and employees, Vivian Stockman, travels to the Republic No. 2 mine site to take photographs of nature and she intends to do so

regularly in the future. Ms. Stockman will thus suffer a direct aesthetic

injury as a result of the permitted activity, and OVEC therefore has standing to proceed with its challenge to the Republic No. 2 permit. See id. at

181 (noting that an organization has standing to bring suit on behalf of its

members where members could sue in their own right, the interests

involved are germane to the organization’s purpose, and the requested

relief does not require the participation of individual members in the suit).

24 OHIO VALLEY v. ARACOMA COAL CO.
trolling unless plainly erroneous or inconsistent with the regulation." Auer v. Robbins, 519 U.S. 452, 461 (1997) (internal

quotations omitted); see also Bowles v. Seminole Rock &

Sand Co., 325 U.S. 410, 413-14 (1945); Kentuckians for the

Commonwealth v. Rivenburgh, 317 F.3d 425, 439 (4th Cir.

2003) (noting that, when reviewing an agency’s interpretation

of its own regulation, "[t]he reviewing court does not have

much leeway"). In applying this principle, also known as

"Auer deference" or "Seminole Rock deference," we must first

determine whether the regulation itself is unambiguous; if so,

its plain language controls. See Christensen v. Harris County,

529 U.S. 576, 588 (2000); United States v. Deaton, 332 F.3d

698, 709 (4th Cir. 2003). If ambiguous, however,

Auer/Seminole Rock deference is applied. See Christensen,

529 U.S. at 588; Deaton, 332 F.3d at 709.

NEPA requires federal agencies to take a "hard look" at the

environmental consequences of their actions, but the statute

does not specify how an agency should determine the scope

of its NEPA analysis. Wetlands Action Network v. United

States Army Corp of Eng’rs, 222 F.3d 1105, 1115 (9th Cir.

2000). The Corps’ implementing regulations, however, specify that the proper scope of analysis for NEPA review is "to

address the impacts of the specific activity requiring a DA

[Department of the Army] permit and those portions of the

entire project over which the [Corps] district engineer has sufficient control and responsibility to warrant Federal review."

33 C.F.R. pt. 325, App. B, § 7(b)(1) (2008). OVEC’s challenge to the scope of the Corps’ NEPA review rests largely

on its misapprehension of what constitutes the "specific activity" requiring a permit.

The Corps’ regulations are unambiguous in requiring a district engineer to address the impacts of the "specific activity

requiring a DA [Department of the Army] permit" in its

NEPA analysis. Id. According to OVEC, the Corps’ § 404

permit is a permit for the entire valley fill, down to the last

shovelful of dirt at the edge of the valley. But § 404 is itself

OHIO VALLEY v. ARACOMA COAL CO. 25
unambiguous about what the Corps is authorized to permit

under the CWA: the Corps "may issue permits, after notice

and opportunity for public hearings for the discharge of

dredged or fill material into the navigable waters at specified

disposal sites." 33 U.S.C. § 1344(a) (2000) (emphasis added).

The specific activity that the Corps is permitting when it

issues a § 404 permit is nothing more than the filling of jurisdictional waters for the purpose of creating an underdrain system for the larger valley fill. In fact, the Corps has no legal

authority to prevent the placement of fill material in areas outside of the waters of the United States. All other fill activity

falls under the exclusive jurisdiction of the WVDEP, as the

federally approved state SMCRA regulatory authority.

Of course, even if the "specific activity" being permitted

under CWA § 404 is the filling of valley streams, the Corps

could still be required under NEPA to consider larger impacts

of the broader valley fill project if the Corps is found to have

"sufficient control and responsibility to warrant Federal

review." 33 C.F.R. pt. 325, App. B, § 7(b)(1) (2008). In cases

where the permitted activity is only one part of a larger project, the regulations specify that the Corps has "control and

responsibility for portions of the project beyond the limits of

Corps jurisdiction where the Federal involvement is sufficient

to turn an essentially private action into a Federal action.

These are cases where the environmental consequences of the

larger project are essentially products of the Corps permit

action." 33 C.F.R. pt. 325, App. B, § 7(b)(2) (2008) (emphasis added).

The regulations go on to suggest several factors to be considered in making this determination, including:

(i) Whether or not the regulated activity comprises

"merely a link" in a corridor type project (e.g., a

transportation or utility transmission project).

(ii) Whether there are aspects of the upland facility

in the immediate vicinity of the regulated activity

26 OHIO VALLEY v. ARACOMA COAL CO.
which affect the location and configuration of the

regulated activity.

(iii) The extent to which the entire project will be

within Corps jurisdiction.

(iv) The extent of cumulative Federal control and

responsibility.

Id.

OVEC’s argument that the Corps has sufficient control and

responsibility over the larger valley fill to warrant its consideration of the environmental impacts of the entire valley fill

project has some intuitive appeal. As OVEC points out, "[t]he

Corps could not seriously contend that, if the § 404 permit for

the stream-covering portions of the fill were denied, the applicants could build the remainder of the fills with a cutout

around the streams. That could be dangerous. The valley fill

is designed for stability as an integral unit." (Appellees’ Br.

at 35 n.2.) Undoubtedly, obtaining a § 404 permit is a "small

but necessary" component of the overall upland project.

United States Army Corps of Engineers, Combined Decision

Document for the Camp Branch Surface Mine Project 4 (July

6, 2006) [hereinafter Camp Branch CDD]; see also United

States Army Corps of Engineers, Combined Decision Document for the Black Castle Surface Mine Project 6 (July 18,

2006) [hereinafter Black Castle CDD]; United States Army

Corps of Engineers, Combined Decision Document for the

Laxare East Surface Mine Project 7 (July 18, 2006) [hereinafter Laxare East CDD]. But the fact that the Corps’ § 404 permit is central to the success of the valley-filling process does

not itself give the Corps "control and responsibility" over the

entire fill. See Wetlands Action Network v. U.S. Army Corps

of Eng’rs, 222 F.3d 1105, 1116-17 (9th Cir. 2000) (observing

that the fact that construction of a development project covering hundreds of acres was dependent on a Corps § 404 permit

to fill sixteen acres of wetlands did not suffice to make the

OHIO VALLEY v. ARACOMA COAL CO. 27
Corps responsible for including the entire project in the scope

of its NEPA analysis).

The Corps’ jurisdiction under CWA § 404 is limited to the

narrow issue of the filling of jurisdictional waters. To say that

the Corps has a level of control and responsibility over the

entire valley fill project such that "the environmental consequences of the larger project are essentially products of the

Corps permit action," 33 C.F.R. pt. 325, App. B, § 7(b)(2)

(2008), is to effectively read out of the equation the elaborate,

congressionally mandated schema for the permitting of surface mining operations prescribed by SMCRA.

Under SMCRA, the state of West Virginia has "exclusive

jurisdiction over the regulation of surface coal mining and

reclamation operations." 30 U.S.C. § 1253 (2000). Congress

clearly contemplated that the regulation of the disposal of

excess spoil and the creation of valley fills fall under the

SMCRA rubric. See 30 U.S.C. § 1265(b)(22)(D) (2000)

(requiring that lateral drains be constructed where a spoil disposal area contains "springs, natural water courses or wet

weather seeps"); Kentuckians for the Commonwealth, Inc. v.

Rivenburgh, 317 F.3d 425, 443 (4th Cir. 2003) ("[I]t is

beyond dispute that SMCRA recognizes the possibility of

placing excess spoil material in waters of the United States

. . . .").

As part of its federally approved SMCRA regulatory program, the WVDEP surface mine permitting process examines

"[e]very detail of the manner in which a coal mining operation is to be conducted . . . . includ[ing] the plan for disposal

of excess spoil for surface . . . mining operations . . . ." (Br.

for the W. Va. Dep’t of Commerce and the W. Va. Dep’t of

Envtl. Prot. as Amici Curiae Supporting Appellants at 13.) As

the Corps explains in its permits, "the social and environmental impacts associated with surface coal mining and reclamation operations are appropriately analyzed by WVDEP in this

context before that agency decides whether to permit the min28 OHIO VALLEY v. ARACOMA COAL CO.
ing operation under SMCRA." Camp Branch CDD 4; Black

Castle CDD 6; Laxare East CDD 7; United States Army

Corps of Engineers, Combined Decision Document for the

Republic No. 2 Surface Mine Project 6 (July 6, 2006) [hereinafter Republic No. 2 CDD]. A SMCRA permit applicant must

provide detailed information about possible environmental

consequences of the proposed operations, as well as assurances that damage to the site will be prevented or minimized

during mining and substantially repaired after mining has

come to an end. The WVDEP must ensure compliance with

SMCRA’s environmental protection performance standards.

See 30 U.S.C. §§ 1257, 1260, 1265 (2000).

If the Corps, by issuing a § 404 permit, can turn a valley

fill project "into a Federal action," 33 C.F.R. pt. 325, App. B,

§ 7(b)(2) (2008), the WVDEP’s regulation of the fill process

becomes at best duplicative, and, at worst, meaningless.

NEPA plainly is not intended to require duplication of work

by state and federal agencies. See 40 C.F.R. § 1506.2(b)

("Agencies shall cooperate with State and local agencies to

the fullest extent possible to reduce duplication between

NEPA and State and local requirements . . . ."). The Corps’

general regulatory approach echoes this sentiment. See 33

C.F.R. § 320.1(a)(5) (2008) ("The Corps believes that state

and federal regulatory programs should complement rather

than duplicate one another."); 33 C.F.R. § 337.1 (2008) (noting that, in issuing public notice for projects involving the discharge of fill material into jurisdictional waters, "[d]istrict

engineers are encouraged to develop procedures to avoid

unnecessary duplication of state agency procedures").

SMCRA also calls for a coordinated and non-duplicative

approach to environmental review. See 30 U.S.C.

§ 1253(a)(6) (2000) (requiring that a state SMCRA program

establish "for the purposes of avoiding duplication, . . . a process for coordinating the review and issuance of permits for

surface coal mining and reclamation operations with any other

Federal or State permit process applicable to the proposed

OHIO VALLEY v. ARACOMA COAL CO. 29
operations"). While SMCRA’s provisions should not be construed as "superseding, amending, modifying, or repealing"

the requirements of NEPA or the CWA, 30 U.S.C. § 1292(a)

(2000), neither should NEPA be construed to require the

Corps to essentially federalize an environmental review process that has already been delegated to federally approved

state programs. See Wetlands Action Network, 222 F.3d at

1117 (noting, in support of its finding that the Corps’ NEPA

analysis for a wetlands-filling permit need not include the

effects of the larger development project, that state regulations control the design of the project and that the larger project was already subject to extensive state environmental

review); Sylvester v. U.S. Army Corps of Eng’rs, 884 F.2d

394, 401 (9th Cir. 1989) ("We, finally, draw comfort from the

fact that ordinary notions of efficiency suggest a federal environmental review should not duplicate competently performed

state environmental analyses.").

In Department of Transportation v. Public Citizen, 541

U.S. 752, 767 (2004), the Supreme Court rejected the idea

that "an agency’s action is considered a cause of an environmental effect [for purposes of NEPA] even when the agency

has no authority to prevent the effect." The Court instructed

that proximate causation, rather than "but for" causation, was

the relevant measure of the causal relationship between the

agency action and the environmental effects. 541 U.S. at 767.

In engaging in this proximate cause analysis, "‘courts must

look to the underlying policies or legislative intent in order to

draw a manageable line between those causal changes that

may make an actor responsible for an effect and those that do

not.’" Id. (quoting Metro. Edison Co. v. People Against

Nuclear Energy, 460 U.S. 766, 774 n.7 (1983)).

But for the Corps’ § 404 permit, a valley fill could not be

built; yet it is WVDEP, and not the Corps, that has "control

and responsibility" over all aspects of the valley fill projects

beyond the filling of jurisdictional waters.11 Thus, under the

11The Ninth Circuit’s opinion in Save Our Sonoran, Inc. v. Flowers, 408

F.3d 1113 (9th Cir. 2005), is not to the contrary. In that case, the court was

30 OHIO VALLEY v. ARACOMA COAL CO.
plain language of the regulation, activity beyond the filling of

jurisdictional waters is not within the Corps’ "control and

responsibility" because upland environmental effects are "not

essentially a product of Corps action," 33 C.F.R. pt. 325, App.

B, § 7(b)(2) (2008).

Even if we credit OVEC’s arguments regarding the Corps’

control and responsibility over the greater valley fill project

as a plausible construction of the Corps’ regulation, we must

still deem the regulation "ambiguous," and the Corps’ interpretation would be entitled to deference as long as it is not

"plainly erroneous or inconsistent with the regulation." Auer,

519 U.S. at 461 (internal quotations omitted); see also Seminole Rock, 325 U.S. at 413-14; Kentuckians for the Commonwealth, 317 F.3d at 439. In the case of each of the challenged

permits, the Corps’ engineers reasonably determined that a

scope of NEPA analysis extending beyond the Corps’ limited

jurisdiction to include environmental effects on upland areas

would encroach on the regulatory authority of WVDEP,

which administers the state’s SMCRA program and is responsible for determining the social and environmental impacts

associated with surface mining operations.12 Camp Branch

CDD 6-7; Black Castle CDD 5-7; Laxare East CDD 6-8;

Republic No. 2 CDD 4-7. Thus the Corps did not act arbitrarnot confronted, as we are, with the problem of overlapping federal and

state regulatory schemes. 

12This interpretation is also not in tension with NEPA itself. "[T]o get

to Seminole Rock deference, a court must first address the straightforward

Chevron [Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837

(1984)] question whether an agency regulation, as interpreted violates the

statute." Kentuckians for the Commonwealth, 317 F.3d at 440 (quoting

John F. Manning, Constitutional Structure and Judicial Deference to

Agency Interpretations of Agency Rules, 96 Colum. L. Rev. 612, 627 n.78

(1996)). NEPA is not a results-driven statute, and requires only that federal agencies carefully consider and weigh competing policy values, Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989),

which the Corps has plainly done here. 

OHIO VALLEY v. ARACOMA COAL CO. 31
ily or capriciously in determining the scope of its NEPA analysis.

B.

The Corps next challenges the district court’s finding that

the Corps failed to adequately support its mitigated FONSIs

under NEPA and its findings of no significant degradation to

waters of the United States under the CWA.13 The Corps takes

issue with three areas in which the district court found the

Corps’ findings to be lacking: (1) the Corps’ CWA analysis

of the impact of the permitted fills on the structure and function of affected streams; (2) the sufficiency of the proposed

mitigation measures for purposes of CWA and NEPA compliance; and (3) the adequacy of the Corps’ NEPA and CWA

assessments of cumulative impacts of the proposed fills. In

finding fault with the Corps’ conclusions, the district court

failed to heed the admonition of Citizens of Overton Park

that, in reviewing agency action, "[t]he court is not empowered to substitute its judgment for that of the agency," 401

U.S. at 416. Focusing now on the administrative record before

us, and viewing the Corps’ findings through the lens of arbitrary and capricious review, we cannot say that its findings

regarding stream structure and function, mitigation, or cumulative impacts were an "abuse of discretion" or "not in accordance with law," 5 U.S.C. § 706(2) (2000).

1.

The Corps’ CWA Guidelines require the Corps to

"[d]etermine the nature and degree of effect that the proposed

discharge will have, both individually and cumulatively, on

the structure and function of the aquatic ecosystem and organisms." 40 C.F.R. § 230.11(e) (2008). The Guidelines do not

13The CDDs issued with each of the challenged permits included the

Corps’ NEPA and CWA analyses and conclusions, as well as details of the

proposed compensatory mitigation plans. 

32 OHIO VALLEY v. ARACOMA COAL CO.
expressly define the phrase "function of the aquatic

ecosystem," but they do identify a variety of factors the

Corps’ should consider, including "potential changes in substrate characteristics and elevation, water or substrate chemistry, nutrients, currents, circulation, fluctuation, and salinity,

on the recolonization and existence of indigenous aquatic

organisms or communities." 40 C.F.R. § 230.11(e) (2008).

In February 1990, the Corps and EPA developed a Memorandum of Agreement to make clear what kind of functional

analysis the Corps was required to conduct. Memorandum of

Agreement Between the Environmental Protection Agency

and the Department of the Army Concerning the Determination of Mitigation Under the Clean Water Act Section

404(b)(1) Guidelines, 55 Fed. Reg. 9210 (Mar. 12, 1990)

[hereinafter "MOA"]. The MOA sets out a common approach

for evaluating stream function, calling for functional values to

be assessed "by applying aquatic site assessment techniques

generally recognized by experts in the field and/or the best

professional judgment of Federal and State agency representatives, provided such assessments fully consider ecological

functions included in the Guidelines." Id. In 2002, the Corps

issued a Regulatory Guidance Letter that called upon Corps

district offices "when possible" to "use functional assessments

by qualified professionals to determine impacts and compensatory mitigation requirements." United States Army Corps of

Engineers Regulatory Guidance Letter, No. 02-2 (Dec. 24,

2002) [hereinafter "RGL 02-02"]. RGL 02-02 provided that

assessment techniques should be "generally accepted by

experts or the best professional judgment" of federal and state

agency representatives. Id.14

14In April 2008, an amendment to the Guidelines superseded RGL 02-

02 as guidance on implementation of the Corps’ compensatory mitigation

policy. See 40 C.F.R. § 230.91(e)(1) (2008). It also superseded the MOA

with respect to any provisions "relating to the amount, type, and location

of compensatory mitigation projects," though all other provisions of the

MOA remain in effect. See 40 C.F.R. § 230.91(e)(2) (2008). Because the

MOA and RGL 02-02 were valid guidance in place at the time of the

Corps’ permitting decisions, however, we must consider the agency’s

action in light of those guidance documents to determine whether the

Corps acted in an arbitrary or capricious manner. 

OHIO VALLEY v. ARACOMA COAL CO. 33
The Corps currently does not have a functional assessment

protocol in place for use in West Virginia, though it is in the

process of developing one. As a result, the Corps relies on the

best professional judgment of its staff to assess aquatic

impacts and potential mitigation measures. This generally

means assessing stream structure as a surrogate for function.

OVEC argues that the plain language of the Guidelines

requires that the Corps analyze both the structural and the

functional effects of fill permits on the affected streams. In

their view, this means that a full functional assessment is

required. The Corps’ failure to complete such an assessment,

OVEC continues, is inconsistent with the plain language of its

regulation,15 and the Corps’ substitute method of using its

"best professional judgment" was arbitrary and capricious

because it lacked any objective standards.

Appellants argue that because the CWA Guidelines provide

no definition of "function" or any specific methodology for

evaluating function, the Corps’ interpretation and implementation of the regulation is entitled to deference. According to

Appellants, the methodologies used by the Corps were an

effective surrogate for functional assessment, and these techniques are compliant with the Guidelines, the MOA, and RGL

02-02.

The district court agreed with Appellants that a functional

assessment was not required and that the Corps was entitled

to deference on how to measure stream structure and function.

It further found that the Corps was entitled to use its "best

professional judgment" in accordance with the MOA and

RGL 02-02 in evaluating functional loss. Nonetheless, the

court concluded that, even under a "best professional judgment" standard, the Corps was obligated, and failed, to fully

assess all ecological functions; to take a "hard look" at the

15OVEC further contends that, consistent with the CWA Guidelines, the

MOA also compels a full functional assessment. 

34 OHIO VALLEY v. ARACOMA COAL CO.
evidence; and, to provide a reasoned basis for its conclusions.

Based on our review of the administrative record, however,

we cannot say that the Corps’ assessments of stream functions

in the challenged permits were arbitrary and capricious.

Contrary to OVEC’s position that the CWA Guidelines

mandate a full functional assessment, the Guidelines in fact

offer no definition of the word "function" or any explanation

of how "structure" and "function" are to be assessed. The

MOA and RGL 02-02 attempt to fill this gap by encouraging

use of a functional assessment but allowing Corps engineers

to use their best professional judgment when such an assessment is not possible. An agency’s interpretation of its own

regulations is due significant deference, Kentuckians for the

Commonwealth Inc., 317 F.3d at 439, and the MOA/RGL 02-

02 approach does not appear plainly erroneous or inconsistent

with the Guidelines.

In this case, the Corps, using its best professional judgment,

used stream structure as a surrogate for assessing stream function.16 Taking Black Castle as an example, the Corps used

detailed measurements provided by Intervenors on the benthic

macroinvertebrate population17 to draw conclusions about the

level of stream function at the proposed fill sites. Black Castle

16The dissent misconstrues the significance of the Corps’ use of structural measurements as a surrogate for a full functional analysis. The

Corps’ methodology does not, as the dissent suggests, make ‘function’

"merely a redundancy for ‘structure.’" Infra at 77. Instead, the Corps has

determined, using its best professional judgment, that structural measurements can provide adequate indications of stream function where a full

functional assessment is not possible. Given the highly deferential standard under which we review administrative action, we cannot say that this

approach is "plainly erroneous or inconsistent with the regulation." Auer,

519 U.S. at 461 (internal quotations omitted). Acknowledgement of this

basic principle of Seminole Rock deference is conspicuously absent from

the dissent. 

17Benthic macroinvertebrates are nonvertebrate, aquatic organisms that

are large enough to be seen with the naked eye. 

OHIO VALLEY v. ARACOMA COAL CO. 35
CDD 102 ("Biological measurements (metrics) represent elements of the structure and function of the bottom-dwelling

macroinvertebrate assemblage. . . Such a measure of structure

and function of the biota . . . is an appropriate indicator of

ecological quality, the integrity of soil and water chemistry,

geological processes, and land use changes.").18 The Corps

also used the EPA’s Rapid Bioassessment Protocol for Use in

Streams and Wadeable Rivers ("RBP") to assess aquatic habitat, it used the EPA-developed West Virginia Stream Condition Index ("WV-SCI") for measuring the types and

proportions of benthic insects, and it followed the EPA’s field

manual for measuring the ecological condition of streams.

OVEC identifies nutrient cycling as one of the factors the

Corps is instructed, but failed, to consider under 40 C.F.R.

§ 230.11(e) (2008). The Corps’ CDDs themselves acknowledge this shortcoming, noting that the effects of filling

ephemeral streams on nutrient cycling are difficult to measure

and that there is a lack of consensus among the relevant agencies about how best to collect quantitative evidence regarding

these functions. To compensate for these effects, however, the

Corps’ permitting decisions call for limiting impacts to channels that do not sustain long periods of flow and for establishing a riparian buffer around mitigation sites.

In fact, in each of its CDDs, the Corps provides its complete findings under 40 C.F.R. § 230.11(e) (2008), including

a section on "Physical and Chemical Characteristics of the

Aquatic Ecosystem," which covers substrate characteristics,

water quality, current patterns and water circulation, water

fluctuations, and salinity gradients; and a section on "Biological Characteristics of the Aquatic Ecosystem," which covers

threatened and endangered species and their habitat, aquatic

organisms in the food web, and other wildlife. Camp Branch

18Similar language can be found in the CDDs for the other permits. See

Camp Branch CDD (Supplement) 5-6; Laxare East CDD 106-07; Republic No. 2 CDD 43-44. 

36 OHIO VALLEY v. ARACOMA COAL CO.
CDD 10-16; Black Castle CDD 13-31; Laxare East CDD 15-

28; Republic No. 2 CDD 15-19. The Corps is entitled to use

its best professional judgment for assessing the structure and

function of the affected aquatic ecosystem, and its CDDs

address the required considerations under the Guidelines, 40

C.F.R. § 230.11(e) (2008).19 Thus, these findings were not

inconsistent with the Corps’ regulations and cannot be characterized as arbitrary, capricious, or otherwise not in accordance

with the law.

The district court placed great weight on the Appellees’

expert testimony at trial in finding that the Corps’ functional

evaluation was lacking. We acknowledge the importance of

extra-record evidence in NEPA cases to inform the court

about environmental factors that the agency may not have

considered. While review of agency action is typically limited

19The dissent suggests that we have "failed to identify the stream functions to be measured under § 230.11(e)," and thus "cannot meaningfully

evaluate the adequacy of the stream assessment protocols that were used."

Infra at 75. But the only clues § 230.11(e) offers regarding the stream

functions to be measured are the § 230.11(e) factors—"potential changes

in substrate characteristics and elevation, water or substrate chemistry,

nutrients, currents, circulation, fluctuation, and salinity, on the recolonization and existence of indigenous aquatic organisms or communities," 40

C.F.R. § 230.11(e) (2008) — and each of the Corps’ CDDs undisputedly

address these factors. 

For the Court to attempt to define stream function beyond these guidelines would certainly be inappropriate judicial intrusion into the Corps and

EPA’s sphere of authority. Yet that is precisely what the dissent attempts

to do. The dissent looks to the functional assessment protocol that is currently being developed by the EPA and divines from that a list of functions that the Corps should have evaluated. See infra at 79-82. At this

stage, however, the EPA protocol is still only in development. The dissent

provides no explanation of why "the most logical place to begin an inquiry

into the meaning of the term ‘function,’" infra at 79, would be with a protocol that still has not been developed as opposed to the already existing

internal guidance documents issued by the EPA and the Corps. In fact, it

is difficult to understand how the Corps could have abused its discretion

by not following guidance that did not even exist at the time it issued the

permits. 

OHIO VALLEY v. ARACOMA COAL CO. 37
to the administrative record that was available to the agency

at the time of its decision, Camp v. Pitts, 411 U.S. 138, 142

(1973) (per curiam), a NEPA suit is inherently a challenge to

the adequacy of the administrative record, see County of Suffolk v. Sec’y of the Interior, 562 F.2d 1368, 1384 (2d Cir.

1977). That is why, in the NEPA context, "courts generally

have been willing to look outside the record when assessing

the adequacy of an EIS or a determination that no EIS is necessary." Webb v. Gorusch, 699 F.2d 157, 159 n.2 (4th Cir.

1983) (citing County of Suffolk, 562 F.2d at 1384).

Such consideration of extra-record evidence in a NEPA

case does not, however, give courts license to simply substitute the judgment of plaintiff’s experts for that of the agency’s

experts.20 Hughes River Watershed Conservancy v. Johnson,

165 F.3d 283, 289-90 (4th Cir. 1999). "Agencies are entitled

to select their own methodology as long as that methodology

is reasonable," and we must defer to such agency choices. Id.

at 289; see also Native Ecosystems Council v. United States

Forest Serv., 428 F.3d 1233, 1244 (9th Cir. 2005) (finding, in

the context of a NEPA challenge, that because the Forest Service had provided a "thorough and reasoned explanation" for

its position, the court would not "take sides in a battle of the

experts" (internal quotations omitted)); Spiller v. White, 352

F.3d 235, 244 (5th Cir. 2003) (same).

Having found that the Corps was not obligated to engage

in a full functional assessment, it is not our place to dictate

how the Corps should go about assessing stream functions

and losses. In matters involving complex predictions based on

special expertise, "a reviewing court must generally be at its

most deferential." Baltimore Gas & Elec. Co. v. Natural Res.

Def. Council, 462 U.S. 87, 103 (1983). When presented with

20Moreover, whatever concerns OVEC’s experts had regarding the sufficiency of the Corps’ functional analysis were expressed in their comments to the Corps during the notice-and-comment period for the permits,

and were incorporated into and responded to in the CDDs. 

38 OHIO VALLEY v. ARACOMA COAL CO.
conflicting evidence, courts must generally defer to the

agency evaluation because "an agency must have discretion to

rely on the reasonable opinions of its own qualified experts

even if, as an original matter, a court might find contrary

views more persuasive." Marsh v. Or. Natural Res. Council,

490 U.S. 360, 378 (1989). The CDDs issued with each permit

include substantial analysis and explanation about the Corps’

impact findings. These determinations are within the agency’s

special expertise and were based on Corps staff’s "best professional judgment." As such, the Corps cannot be said to

have acted arbitrarily or capriciously.

2.

OVEC next questions the sufficiency of the mitigation

plans contained in the CDDs for each of the challenged permits. OVEC charges that the proposed mitigation measures

are insufficient both to satisfy the Corps’ requirements under

the CWA and to justify the issuance of a mitigated FONSI in

lieu of a full EIS under NEPA.

Under the Corps’ CWA Guidelines, a § 404 permit cannot

issue "unless appropriate and practicable steps have been

taken which will minimize potential adverse impacts of the

discharge [of fill material] on the aquatic ecosystem." 40

C.F.R. § 230.10(d) (2008). In their MOA of 1990, the EPA

and Corps make "no overall net loss" the goal of the § 404

regulatory program,21 and agree that mitigation has three components: avoidance, minimization, and compensatory mitigation. 55 Fed. Reg. 9210 (Mar. 12, 1990). Avoidance is defined

as the selection of the least environmentally damaging practical alternative. Id. Minimization is achieved through practicable project modifications and permit conditions that minimize

21"No overall net loss" is classified only as a "goal" because the agencies "recognized that no net loss of wetlands functions and values may not

be achieved in each and every permit action." 55 Fed. Reg. 9210 (Mar. 12,

1990). 

OHIO VALLEY v. ARACOMA COAL CO. 39
adverse impacts. Id. Finally, compensatory mitigation is used

where appropriate to compensate for unavoidable adverse

impacts after all avoidance and minimization measures have

been taken. Id.

Compensatory mitigation can include the restoration of

existing wetlands or the creation of new wetlands, and is to

be done as close to the discharge site as possible ("on-site mitigation"). Id. Where on-site mitigation is not possible, off-site

mitigation is permitted but should take place in the same geographic area if possible. Id. The MOA specifically directs that

the functional values lost should be carefully considered when

determining compensatory mitigation, and that, generally, inkind mitigation should be used. Id. Noting the continued

uncertainty of success in wetland creation, the MOA further

instructs that restoration options should be considered before

creation options. Id.

The mitigation measures specified for the four challenged

fill projects include stream enhancement,22 stream restoration,

and stream creation. Each of the proposed compensatory mitigation plans would, according to the Corps, lead to no net loss

of habitat.23

22Enhancement may take the form of planting of native species of trees

and plants along and in streams, establishing proper stream crossings, stabilizing banks, and/or cleaning stream beds to improve the streams’ habitat, aquatic diversity, and water quality. 

23For the Camp Branch project, the Corps’ mitigation plan requires restoration of 2,035 linear feet of impacted streams, including the sediment

ponds and the stream segments running between the fill and the sediment

pond. It also requires creation of 41,271 linear feet of stream, both at the

mining site and at an adjacent off-site location within the same watershed.

A minimum 50-foot vegetated riparian zone would be established along all

of the restored and created stream areas. 

For the Black Castle project, the Corps’ mitigation plan includes plans

to compensate for temporary impacts caused by construction of the sediment ponds by restoring 7,590 linear feet of stream. Permanent impact

mitigation will include enhancement of 18,000 linear feet of perennial

40 OHIO VALLEY v. ARACOMA COAL CO.
Much of OVEC’s concern over the proposed compensatory

mitigation plans focuses on the potential impacts on headwater streams. As noted earlier, the role of headwater streams in

downstream ecology is a matter of some debate in the scientific community and among the parties to this litigation.

According to OVEC’s experts, headwater streams function

uniquely in stream ecology, collecting and transporting

organic matter to nourish aquatic life downstream, allowing

higher levels of nutrient uptake than perennial streams, and

serving as a habitat for a variety of benthic organisms. Intervenors, on the other hand, offered expert testimony that, while

headwater streams are "very important" to stream ecology

(J.A. 4345), downstream waters could still maintain a healthy

benthic community even when headwater streams were filled,

as long as the water quality below the fill remained good.24

streams. The Corps further estimates that the placement of alkaline overburden from the mining project into the fills will actually improve another

5,420 feet of stream below the fills by decreasing the acidity and aluminum levels found in those waters as a result of prior mining activity and

construction. 

In the case of the Laxare East project, the Corps developed a mitigation

plan calling for restoration of 7,101 linear feet of temporarily impacted

streams, as well as creation of 13,621 linear feet of stream and enhancement of another 16,000 linear feet. 

Finally, the Corps’ mitigation plan for the Republic No. 2 project calls

for restoration of 2,276 linear feet of temporarily impacted stream, as well

as enhancement of 10,777 linear feet of Long Branch, a tributary adjacent

to the permit area. As with the Black Castle project, the Corps found that

the streams that would be filled already suffered from poor to fair water

quality due to previous, pre-SMCRA mining activities. 

24The Intervenors’ expert, Mr. Kirk, did acknowledge that mayfly populations in downstream waters have been reduced as a result of the placement of valley fills in headwaters, but he characterized mayflies as

particularly "sensitive" organisms and indicated that the reduction in their

numbers was "one of the only dramatic changes that occurs, if the water

quality still is fairly good downstream . . . ." (J.A. 4352.) Another expert

for the Intervenors, Dr. Donald Cherry, testified however that the functions served by the mayflies in these waters were fulfilled by other organisms. 

OHIO VALLEY v. ARACOMA COAL CO. 41
Another expert for the Intervenors further testified that, in

fact, ephemeral streams "will not provide as much benefit as

downstream reaches," because their ephemeral nature does

not allow them to "be giving the same type of value and processes as the one that’s functioning all the time." (J.A. 4381.)

The Corps, meanwhile, seems to take the position that,

whatever the functional uniqueness of headwater streams,

nothing in NEPA, the CWA, or the Corps’ regulations prevents them from allowing mitigation of headwater stream

destruction through enhancement, restoration, or creation of a

downstream perennial system.

The district court, again relying heavily on the trial testimony of OVEC experts, concluded that the Corps had failed

to fully assess the impacts of destroying headwater streams.

Taking OVEC’s view of the unique role of headwater

streams, the district court found that the mitigation plans

failed to explain how a valley fill’s destruction of headwater

streams could be compensated for simply by the creation,

enhancement, or replacement of an equal or greater length of

some other stream type. The court further suggested that the

Corps’ failure to conduct a full functional assessment meant

that it ignored a number of critical headwater stream values

in its evaluation of adverse impacts, and therefore the mitigation plans could not possibly be adequate to offset adverse

impacts.

The Corps defends the mitigation plans by arguing that

nothing in the CWA Guidelines requires compensatory mitigation measures that precisely replicate the functions of the

impacted streams. Having reviewed the Guidelines, this Court

concludes that, whatever the role of headwater streams in

overall watershed ecology, the Corps is not required to differentiate between headwater and other stream types in the determination of mitigation measures.

In reaching this conclusion, we look to the Corps’ guidance

in RGL 02-02, which provides that "[d]istricts should require

42 OHIO VALLEY v. ARACOMA COAL CO.
compensatory mitigation projects for streams to replace

stream functions where sufficient functional assessment is

feasible. However, where functional assessment is not practical, mitigation projects for streams should generally replace

linear feet of stream on a one-to-one basis."

As we have already noted, a full functional assessment protocol is not yet available to the Corps, and the Corps is thus

entitled to use its best professional judgment to assess structural and functional losses for purposes of the Guidelines.

Similarly, RGL 02-02 advises that, where a full functional

assessment is not feasible, the only compensatory mitigation

measure the Corps must require in a permitting decision is

stream replacement on a one-to-one basis.25 Nothing in the

Corps’ CWA guidance requires that only in-kind, on-site mitigation measures be used. By this standard, the Corps’ permitting decisions have exceeded the mitigation requirements by

creating mitigation plans involving greater than one-to-one

replacement schemes. The Camp Branch project, for example,

involved 15,514 linear feet of direct impacts, and the permit

requires mitigation of 43,306 feet.

The Corps’ guidance does instruct that "functional values

lost by the resource to be impacted must be considered" in

developing a mitigation plan. MOA, 55 Fed. Reg. 9210 (Mar.

12, 1990). But the guidance also provides that compensatory

mitigation must be "practicable." Id. The Corps’ guidance

documents indicate that, in "determining ‘practicability,’ Dis25The dissent contends that this provision of the RGL is inconsistent

with 40 C.F.R. § 230.11(e) and thus "illegal." Infra at 87. But this contention is grounded on the dissent’s faulty assumption that a full functional

assessment is required in order to satisfy § 230.11(e). The fact remains

that § 230.11(e) provides no guidance as to how ‘function’ is to be

assessed beyond identifying several factors which the Corps should consider. See 40 C.F.R. § 230.11(e). All four of the challenged CDDs address

each of these factors. Given that the Corps’ guidance documents are not

plainly contrary to the meaning of the Guidelines, the dissent’s efforts to

undermine their legitimacy are unavailing. 

OHIO VALLEY v. ARACOMA COAL CO. 43
tricts will consider the availability of suitable locations, constructability, overall costs, technical requirements, and

logistics." RGL 02-02. "In certain circumstances of regions of

the country, on-site compensatory mitigation opportunities are

limited," and the Corps must look instead to other compensatory options. Thomas F. Caver, Deputy Dir. of Civil Works,

U.S. Army Corps of Eng’rs, Internal Guidance on Mitigation

for Impacts to Aquatic Resources from Surface Coal Mining

(May 7, 2004). In other circumstances, the stream functions

being lost on-site may be "ubiquitous in the watershed," while

"wetland functions are rare or degraded." Id. In such a situation, "it may be appropriate to replace lost stream functions

with wetlands functions." Id. Thus, where on-site or in-kind

functional mitigation is not practicable or even ecologically

preferable, the Corps’ guidance allows compensation plans

that employ off-site or out-of-kind mitigation based on

improvements to the overall aquatic health of the watershed.

For example, in the case of the Laxare East and Black Castle permits, the Corp’s mitigation plans aimed to improve the

water quality of already severely distressed streams in portions of the Laurel Creek watershed. Similarly, in the case of

the Republic No. 2 mine, the mitigation plan was designed to

address stability issues along the Long Branch tributary,

based on an assessment that "this section of stream could contribute to improved aquatic habitat and ultimately aquatic

diversity. . . . by attempting to replace the chemical, hydrologic, and geomorphic functions of the impacted channels."

Republic No. 2 CDD 13. Each of these mitigation plans

accords with the holistic watershed approach called for in the

Corps’ guidance documents.

Moreover, each of the mitigation plans for the challenged

permits included requirements for continued monitoring of

the efficacy of the mitigation measures, in some cases for as

much as 10 years.26 Each permit also contains detailed special

26If minimum criteria are not met at the end of the established monitoring period, further monitoring may be required. 

44 OHIO VALLEY v. ARACOMA COAL CO.
conditions that impose numerous performance standards to

measure and ensure the success of mitigation.27

OVEC also takes issue with the use of stream creation as

a mitigation measure. The Camp Branch and Laxare East

plans both employ stream creation as a significant component

of their compensatory mitigation schemes. Under these plans,

sediment ditches used during mining to collect runoff, control

drainage, and collect sediment, will be converted into new

stream channels. OVEC’s experts have questioned these

stream creation proposals, calling them scientifically untested

and unsound.

The Corps’ support for its claim that the proposed stream

creation measures have good potential for success is admittedly limited. The Corps cites one example of stream creation

in a mining area in Kentucky as well as an Ohio State University study on the potential for enhancing the natural ecology

of drainage ditches. See Camp Branch CDD 44; Laxare East

CDD 98-101. However, the novelty of a mitigation measure

alone cannot be the basis of our decision to discredit it. When

an agency is called upon to make complex predictions within

its area of special expertise, a reviewing court must be at its

most deferential. Baltimore Gas & Elec. Co. v. Natural Res.

Def. Council, 462 U.S. 87, 103 (1983); see also Marsh v. Or.

Natural Res. Council, 490 U.S. 360, 378 (1989) ("When spe27OVEC takes issue with the mitigation measurement standards

employed by the Corps, claiming that, for three of the four challenged permits, the Corps relies improperly on the Stream Habitat Unit ("SHU")

model developed by the applicants to determine mitigation. According to

OVEC, the SHU lacks a scientific basis and distorts the evaluation of

streams by focusing on habitat measures and physical appearance and giving insufficient weight to stream function measures and to the unique role

of headwater streams in watershed ecology. But, the Corps did rely not on

the SHU to determine required mitigation. The Corps’ baseline standard

for mitigation is the one-to-one linear feet replacement called for by the

Corps’ guidance documents. The SHU model was used to provide supplemental data regarding habitat and as a measurement standard to help monitor the success of habitat creation, enhancement, or restoration efforts. 

OHIO VALLEY v. ARACOMA COAL CO. 45
cialists express conflicting views, an agency must have discretion to rely on the reasonable opinions of its own qualified

experts even if, as an original matter, a court might find contrary views more persuasive."). The Corps admits that "[t]ime

is required with any new, scientifically based development as

well as monitoring and evaluation to show the success and/or

failures of the project." Camp Branch CDD (Supplement) 3.

And, the monitoring plans in place for Camp Branch and Laxare East allow the Corps to reevaluate their efficacy determinations as the stream creation projects progress.

Because the mitigation measures reflect the Corps’ determinations of the most appropriate and practicable means of

compensating for anticipated impacts and losses of value, we

cannot say that the Corps’ conclusion that compensatory mitigation would offset the adverse effects of the fill activity was

arbitrary, capricious, or otherwise not in accordance with the

requirements of the CWA. Cf. Fla. Keys Citizens Coal., Inc.

v. U.S. Army Corps of Eng’rs, 374 F. Supp. 2d 1116, 1158-59

(S.D. Fla. 2005); Airport Cmtys. Coal. v. Graves, 280 F.

Supp. 2d 1207, 1227-28 (W.D. Wash. 2003).

The Corps’ proposed mitigation plans are also sufficient to

justify issuance of a mitigated FONSI for purposes of NEPA.

In O’Reilly v. U.S. Army Corps of Engr’s, 477 F.3d 225 (5th

Cir. 2007), the Fifth Circuit found that the Corps’ EA and

mitigated FONSI for a § 404 permit application were inadequate because the Corps failed to establish that identified

adverse impacts of wetland filling would actually be corrected

by its proposed mitigation measures.28 The court noted that

generally "proposed mitigation measures need not be laid out

to the finest detail," but they also could not be purely perfunctory or conclusory. Id. at 231 (citing Robertson v. Methow

Valley Citizens Council, 490 U.S. 332, 352 (1989)).

28Given our earlier finding that the Corps reasonably restricted the

scope of its NEPA analysis, the Corps did not need to consider mitigation

efforts beyond those aimed at countering the impacts of the filling of jurisdictional waters. 

46 OHIO VALLEY v. ARACOMA COAL CO.
Volume 2 of 2

OHIO VALLEY v. ARACOMA COAL CO. 47
In this case, by contrast, the Corps did explain how mitigation would compensate for fill impacts. In the Black Castle

CDD, for example, the Corps explains that:

[t]he applicant’s mitigation plan would be expected

to result in the replacement of the appropriate type

and quantity of aquatic functions lost due to project

impacts. The goal of the applicant’s CMP [Compensatory Mitigation Plan] is to re-establish, restore,

and/or enhance the values of each habitat parameter

(i.e. embeddedness and sediment deposition, velocity/depth regime, riparian cover, bank stability and

vegetative protection), in order to promote a general

improvement in the area’s existing benthic conditions. Before impacts, the streams proposed to be

impacted by the proposed activities were measured

for detailed Rosgen-type morphological parameters,

OHIO VALLEY v. ARACOMA COAL CO. 55
aquatic resources, habitat, substrate, and riparian

parameters in order to reconstruct these sections of

channels to their approximate original state . . . , thus

utilizing an ecological restoration approach on these

sections of channels by replacing the physical and

geomorphic functions . . . . This approach focuses on

replacing the corridor structure and function, therefore, enabling communities to recover to a sustainable level. Stream functions were identified and

quantified as part of the conducted benthic surveys,

water sampling, habitat assessments, and [West Virginia Stream Condition Index] WVSCI and were

used in the design of the applicant’s CMP. A variety

of components that address aquatic habitat functions

such as improvement to water quality and temperature, organic input, and macroinvertebrate, fisheries,

and riparian habitat has been incorporated into the

applicant’s mitigation plan. The applicant’s specific

goals include reducing sediment runoff, improving

marginal aquatic habitats for benthic macroinvertebrates and fish both functionally and aesthetically,

and restoring functions by eradicating invasive species, stabilizing eroded and collapsed banks, installing proper road crossings, placing or repositioning

boulders, and planting native riparian vegetation.

These improvements would ultimately improve

aquatic habitat for fauna within the Laurel Creek

watershed.

Black Castle CDD 42-43; see also id. at 102-03.29

The Corps is thus able to "articulate a satisfactory explanation for its action including a ‘rational connection between the

facts found and the choice made.’" Motor Vehicle Mfrs. Ass’n

29Similar explanations were provided in the other challenged CDDs. See

Camp Branch CDD 61-62; Laxare East CDD 41-42, 108-09; Republic No.

2 CDD 13-14. 

56 OHIO VALLEY v. ARACOMA COAL CO.
v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983)

(quoting Burlington Truck Lines, Inc. v. United States, 371

U.S. 156, 168 (1962)); see also Ohio River Valley Envtl

Coal., Inc. v. Kempthorne, 473 F.3d 94, 102-103 (4th Cir.

2006). Given this, we conclude that the compensatory mitigation plans contained in the CDDs for each of the challenged

permits were sufficient both for purposes of satisfying the

Corps’ requirements under the CWA and for justifying issuance of a mitigated FONSI under NEPA.

3.

Under both NEPA and the CWA, the Corps is required to

consider the cumulative impacts of an applicant’s proposed

project. Under NEPA, the Corps must evaluate "[w]hether the

action is related to other actions with individually insignificant but cumulatively significant impacts." 40 C.F.R.

§ 1508.27(b)(7) (2008). Under the CWA, the Corps’ Guidelines instruct that a project should not receive a § 404 permit

"unless it can be demonstrated that [the project] will not have

an unacceptable adverse impact either individually or in combination with known and/or probable impacts of other activities affecting the ecosystems of concern." 40 C.F.R.

§ 230.1(c) (2008). In each of the four challenged permitting

decisions, the Corps found that no cumulatively significant

impacts would occur.

OVEC argues that the Corps’ cumulative impact analysis

failed in two respects. First, OVEC claims that, because the

Corps improperly limited the scope of its NEPA analysis to

the streams alone, it also failed to assess the cumulative

impacts of the fills on the valleys themselves. Given our earlier finding that the Corps was entitled to deference in its

decision to limit the scope of its NEPA analysis to the impacts

from the filling of jurisdictional waters, this first argument by

OVEC must fail.

Second, OVEC argues that the Corps’ conclusions about

cumulative impacts with regard to the streams and watersheds

OHIO VALLEY v. ARACOMA COAL CO. 57
themselves were insufficient. Appellants respond that the

Corps complied with relevant regulations and guidance in its

cumulative impact analysis. For each CDD, the Corps

included an evaluation of (1) present conditions and probable

future conditions if fill activity is not allowed; (2) the direct

and indirect effects that fill activity would have on those conditions; and (3) how fill activity would interact with past or

future impacts from other activity in the area. See Camp

Branch CDD 24-30; Black Castle CDD 43-53; Laxare East

CDD 43-56; Republic No. 2 CDD 21-24.

The district court found the Corps’ cumulative impact analysis faulty because it presumed that the Corps’ determination

relied improperly on mitigation to eliminate adverse impacts.

The district court is correct that a "mitigated to insignificance" analysis does not suffice to demonstrate an absence of

cumulatively significant impacts. The Fifth Circuit rejected

just such an approach in O’Reilly, 477 F.3d at 234-35.

In O’Reilly, the Corps had issued a CWA § 404 permit to

a residential developer after issuing a mitigated FONSI. The

court agreed with plaintiffs, area residents who opposed the

planned subdivision being developed, that the Corps acted

arbitrarily in issuing the mitigated FONSI because it failed

both to properly articulate how adverse effects were mitigated

to insignificance and to adequately consider cumulative

effects. Id. at 227. On this latter shortcoming, the Corps had

stated that "mitigation for impacts caused by the proposed

project, possible future project phases, and all Corps permitted projects will remove or reduce e[x]pected impacts." Id. at

235 (alteration in original) (internal quotations omitted). The

court rejected this argument, observing that, without further

explanation from the Corps, it could not accept the presumption that "when the individually ‘mitigated-to-insignificant’

effects of this permit are added to the actual post-dredge and

fill effects of 72 other permits issued to third parties by the

Corps in the area, that the result will not be cumulatively significant." Id. (emphasis in original).

58 OHIO VALLEY v. ARACOMA COAL CO.
This case is different. While the Corps’ finding of no

cumulative adverse impacts does lean, to some extent, on mitigation, it is not in the same perfunctory, conclusory way that

was found inadequate in O’Reilly. For one thing, the Corps’

findings rely in part on both the WVDEP’s CWA § 401 certification and SMCRA permitting process. Under CWA § 401,

the WVDEP must certify that proposed mining activity will

not cause or contribute to a violation of state water quality

standards. See 33 U.S.C. § 1341 (2000). The § 401 certification process involves, among other things, consideration of:

impacts of the project in light of other activities in

the watershed . . . and anti-degradation requirements

. . . . [which] work to reduce or eliminate cumulative

impacts by providing a process to maintain existing

water quality levels to meet intended uses. . . .

Therefore, the Corps views the state water quality

certification as satisfying the water quality portion of

cumulative impact analysis . . . .

Laxare East CDD 122. A § 401 certification is considered

conclusive, and no independent analysis of the certification is

required. 33 C.F.R. § 320.4(d) (2008); see also Bering Strait

Citizens for Responsible Res. Dev. v. U.S. Army Corps of

Eng’rs, 524 F.3d 938 (9th Cir. 2008).

The SMCRA permitting process also requires the director

of WVDEP to prepare an assessment of the probable cumulative impact of all anticipated (past, present, and future) mining on the hydrologic balance in the area of the mine and

make a finding that the proposed operation has been designed

to prevent material damage to the hydrologic balance outside

the permit area. W. Va. Code § 22-3-18(b)(3) (2005). This

Cumulative Hydrologic Impact Assessment ("CHIA") is part

of the administrative record for each of the challenged permits. See, e.g., Laxare East CDD 134.

In finding the Corps’ cumulative impact analysis inadequate, the district court charged that "[t]he Corps does not

OHIO VALLEY v. ARACOMA COAL CO. 59
explain how the cumulative destruction of headwater streams

already affected by mining in these watersheds will not contribute to an adverse impact on aquatic resources." Ohio Valley Envtl Coal. v. U.S. Army Corps of Eng’rs, 479 F. Supp.

2d 607, 659 (S.D. W. Va. 2007). In fact, each of the Corps’

permits directly addresses the cumulative impact issue. In the

Republic No. 2 CDD, for example, the Corps acknowledges

that the impact of pre-SMCRA mining has degraded the upper

Cabin Creek watershed. See Republic No. 2 CDD 23. However, the Corps notes that mining in the same seams as proposed for Republic No. 2 has not resulted in any acid mine

drainage problems. Id. at 16. The Corps also notes that as part

of the CWA § 402 NPDES program, anti-degradation standards have been calculated for each pond outlet to ensure no

material impacts to water quality downstream and to ensure

water quality standards are met. Id. Significantly, the CHIA

prepared by WVDEP, which considered the impact of the

Republic No. 2 operation and all other past, present, and

future mining in the watershed, determined there would be no

cumulative adverse impact. Id.

Thus, the Corps concluded that

while there would be short-term impacts to the

aquatic and terrestrial environment as a result of the

proposal, it is anticipated the proposed mining activities would have no adverse cumulative environmental impacts within the subwatershed or the overall

Cabin Creek watershed. The proposal, if implemented as described, should improve the overall ecological balance of the area. Further, the proposal and

resultant mitigation and reclamation requirements

are expected to improve the overall health of the

Cabin Creek watershed.

Id. at 24.30

30Similar language can be found in the other permits. See, e.g., Black

Castle CDD 43-53; Laxare East CDD 43-56. 

60 OHIO VALLEY v. ARACOMA COAL CO.
Because the Corps has analyzed cumulative impacts in each

of the challenged permits and has articulated a satisfactory

explanation for its conclusion that cumulative impacts would

not be significantly adverse, we find that the Corps did not act

arbitrarily or capriciously in conducting its required cumulative impact analysis.

V.

Appellants also challenge the district court’s June 13, 2007,

order granting OVEC declaratory relief on the question of

whether stream segments connecting valley fills to downstream sediment ponds are properly classifiable under the

CWA as waters of the United States and thus not within the

Corps’ § 404 authority to allow. We conclude that stream segments, together with the sediment ponds to which they connect, are unitary "waste treatment systems," not "waters of the

United States," and that the Corps’ has not exceeded its § 404

authority in permitting them.

A.

At the outset of our analysis on this issue, we must deal

with the Intervenors’ argument that the doctrine of res judicata precludes OVEC’s claim of entitlement to declaratory

relief. Intervenors argue that plaintiffs could and should have

raised this claim in the course of the Bragg v. Robertson litigation, and their failure to do so bars them from raising it

now. The district court rejected this argument in a memorandum opinion and order dated August 10, 2006; we review de

novo, see Q Int’l Courier, Inc. v. Smoak, 441 F.3d 214, 216

(4th Cir. 2006).

In Bragg v. Robertson, 54 F. Supp. 2d 653 (S.D. W. Va.

1999), aff’d in part, rev’d in part sub nom. Bragg v. W. Va.

Coal Ass’n, 248 F.3d 275 (4th Cir. 2001), the plaintiffs—including several individuals and the West Virginia

Highlands Conservancy, one of the plaintiffs in this

OHIO VALLEY v. ARACOMA COAL CO. 61
case—brought suit against, inter alia, the Corps and WVDEP

for various alleged violations of their statutory duties under

SMCRA, the CWA, and NEPA in the course of their mountaintop removal permitting activities. With respect to the

Corps, the plaintiffs’ complaint alleged that the agency did

not have authority under the CWA to regulate valley fills

because mining spoil did not meet the definition of "fill material" under the CWA.

Plaintiffs subsequently entered into a settlement agreement

with the Corps that resolved their claims regarding the Corps’

past alleged violations under the CWA and NEPA.31 See id.

Under the terms of the agreement, the plaintiffs gave up their

right to challenge the Corps’ authorization of valley fills

under the theory that mining spoil is not fill material. See id.

at 657 n. 5. The agreement expressly reserved for the plaintiffs, however, "the right to challenge under the APA any

future Corps’ CWA section 404 authorization for any valley

fill in waters of the United States that may be authorized by

the Corps after the Effective Date of this Settlement Agreement." (J.A. 139-40); see also Bragg, 54 F. Supp. 2d at 657.

The district court approved the settlement agreement and dismissed all outstanding claims against the Corps with prejudice. Bragg, 54 F. Supp. 2d 653-54.

Intervenors claim that the district court’s orders in the

Bragg litigation were final adjudications for purposes of claim

preclusion and that principles of res judicata bar OVEC from

now challenging the Corp’s permitting of the use of stream

31The district court in Bragg, having determined that the settlement

agreement was "fair, adequate, and reasonable," dismissed plaintiffs’

claims against the federal defendants with prejudice, but granted leave for

the plaintiffs to file a second amended complaint. 54 F. Supp. 2d at 670.

In a separate memorandum opinion and order, see Bragg v. Robertson, 83

F. Supp. 2d 713 (S.D. W. Va. 2000), the court resolved all outstanding

claims (which involved only WVDEP and claims under SMCRA), by

accepting a consent decree between the plaintiffs and WVDEP. 

62 OHIO VALLEY v. ARACOMA COAL CO.
segments to connect fills to downstream sediment ponds. We

find this argument unpersuasive.

Res judicata or claim preclusion bars a party from suing on

a claim that has already been "litigated to a final judgment by

that party or such party’s privies and precludes the assertion

by such parties of any legal theory, cause of action, or defense

which could have been asserted in that action." 18 James Wm.

Moore et al., Moore’s Federal Practice § 131.10(1)(a) (3d ed.

2008). For res judicata to prevent a party from raising a claim,

three elements must be present: "(1) a judgment on the merits

in a prior suit resolving (2) claims by the same parties or their

privies, and (3) a subsequent suit based on the same cause of

action." Aliff v. Joy Mfg. Co., 914 F.2d 39, 42 (4th Cir. 1990).32

In finding that the second suit involves the same cause of

action, the court need not find that the plaintiff in the second

suit is proceeding on the same legal theory he or his privies

advanced in the first suit. See id. at 43. As long as the second

suit "arises out of the same transaction or series of transactions as the claim resolved by the prior judgment," the first

suit will have preclusive effect. Id. (internal quotations omitted).

OVEC argues that the claims involved in this case and in

Bragg are different, because in Bragg the plaintiffs challenged the Corps’ authority to permit valley fills and in this

case the plaintiffs have challenged the Corps’ authority to

authorize pollutant discharge into stream segments. This argument, as Intervenors point out, misunderstands the principles

of claim preclusion. Even claims that were not raised in the

original suit may be precluded if they arose from the same

transaction or occurrence as those raised in the first suit and

were available to the plaintiff at the time of the first suit. See

Aliff, 914 F.2d at 42-43.

32OVEC does not challenge in its arguments that the "same parties or

their privies" requirement is met. 

OHIO VALLEY v. ARACOMA COAL CO. 63
Nonetheless, claim preclusion does not apply in this case

for two reasons. First, the Bragg settlement agreement explicitly reserved plaintiffs’ right to challenge the Corps’ valley fill

permit authority in the future. The Bragg plaintiffs conceded

only that they would not raise such a challenge on the theory

that mining spoil is not fill material. Settlement agreements

operate on contract principles, and thus the preclusive effect

of a settlement agreement "should be measured by the intent

of the parties." 18A Charles Alan Wright, Arthur R. Miller,

& Edward H. Cooper, Federal Practice and Procedure

§ 4443 (2d ed. 2002). Here it seems clear that the parties

intended to retain for the plaintiffs the right to challenge the

Corps’ permitting of future valley fill projects on any grounds

other than the one specifically raised in Bragg.

Second, OVEC is challenging a different set of permits in

this case than those at issue in Bragg. The Corps had not even

issued the permits in question here at the time of the Bragg

litigation. Intervenors’ argument that OVEC should have

raised its stream segment claim during the Bragg litigation

falls flat because the claim here concerns four permits that

were not even in existence at the time of Bragg. The fact that

the two suits involve challenges to very similar courses of

conduct does not matter; a prior judgment "cannot be given

the effect of extinguishing claims which did not even then

exist . . . ." Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322,

328 (1955). A contrary finding would confer "partial immunity from civil liability for future violations." Id. at 329.

For these reasons, we affirm the lower court’s finding that

OVEC’s stream segments claim is not barred by principles of

res judicata.

B.

The district court’s June 13, 2007, order granted OVEC’s

motion for partial summary judgment on its claim that the

Corps did not have authority under § 404 of the CWA to

64 OHIO VALLEY v. ARACOMA COAL CO.
authorize the discharge of fill sediment into the stream segments that link the fill to a downstream sediment pond. The

court found that the stream segments were "waters of the

United States" and not part of "waste treatment systems," as

the Corps characterized them. While acknowledging the deference traditionally due an agency’s interpretation of its own

regulations, the court found that in this case the Corps’ interpretation was a post hoc rationalization, created for the purposes of this litigation. As a result, the court held that

discharges from the fill into the segment streams were impermissible without a separate CWA § 402 NPDES permit. We

review this question of law de novo. United States v. Deaton,

332 F.3d 698, 703-04 (4th Cir. 2003).

Because this is an issue of statutory and regulatory interpretation, we must apply the framework for review laid out in

Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S.

837, 843 (1984) and Bowles v. Seminole Rock & Sand Co.,

325 U.S. 410, 413-14 (1945).

In determining whether the Corps’ interpretation is entitled

to deference, this Court must first look to the language of the

authorizing statute. Chevron, 467 U.S. at 842-43 (1984). An

agency’s reasonable interpretation of a statute is entitled to

deference, unless Congress has already expressed a clearly

contrary intent. Id.

The CWA prohibits the discharge of any pollutant unless

done in compliance with statutory requirements. 33 U.S.C.

§ 1311 (2000). It goes on to define the phrase "discharge of

a pollutant" to include "any addition of any pollutant to navigable waters from any point source . . . ." 33 U.S.C.

§ 1362(12)(A) (2000). The term "navigable waters," in turn,

is defined as "the waters of the United States." 33 U.S.C.

§ 1362(7) (2000).

The Corps’ regulations implementing the CWA have

defined the "waters of the United States" to include interstate

OHIO VALLEY v. ARACOMA COAL CO. 65
waters as well as "all other waters such as intrastate lakes, rivers, [and] streams (including intermittent streams). . . ." 33

C.F.R. § 328.3(a)(3) (2008); 40 C.F.R. § 232.2 (2008). The

regulations also include in the definition "[a]ll impoundments

of waters otherwise defined as waters of the United States

under the definition." 33 C.F.R. § 328.3(a)(4) (2008); see also

40 C.F.R. § 232.2 (2008). The regulations, however, exclude

from the definition "waste treatment systems, including treatment ponds or lagoons designed to meet the requirements of

CWA." 33 C.F.R. § 328.3(a)(8) (2008); see also 40 C.F.R.

§ 232.2 (2008).

In Deaton, 332 F.3d at 709, this Court found that Congress’

decision to define "navigable waters" broadly as "waters of

the United States" evinced an intent to regulate at least some

waters that would not be considered navigable. The Court

went on to find, however, that the Act was not clear what nonnavigable waters it intended to cover, and thus that the phrase

"waters of the United States" was "sufficiently ambiguous to

constitute an implied delegation of authority to the Corps" to

determine the scope of the phrase. Id. at 709-10.

Given that the Corps has the authority to determine which

waters are covered by the CWA, this Court must next look to

the Corps’ regulations implementing the CWA. Id. at 710. If

the regulation defining "waters of the United States" is ambiguous, then the Corps’ interpretation of that definition is entitled to Seminole Rock deference and controls unless plainly

erroneous or inconsistent with the regulation. Id. at 711.

Appellants and OVEC agree that, in the absence of the valley fill, the stream segments in question would be considered

"waters of the United States" because they would be part of

a natural stream pursuant to 33 C.F.R. § 328.3(a)(3). OVEC

contends that, even after the streams have been co-opted for

use in conjunction with valley fills, the segments are still "impoundments of water otherwise defined as waters of the

United States" and thus treated as "waters of the United

66 OHIO VALLEY v. ARACOMA COAL CO.
States" under 33 C.F.R. § 328.3(a)(4). If OVEC is correct,

any discharge of sediment into these stream segments from

the valley fills would require a CWA § 402 NPDES permit.

The Corps, however, counters that the stream segments and

the sediment ponds to which they connect form a "waste treatment system" under 33 C.F.R. § 328.3(a)(8). Thus, in the

Corps’ view, the stream segments are exempt from the "waters of the United States" definition and a § 404 permit suffices to authorize them.

The Corps’ definition of "waters of the United States"

relies heavily on that adopted by the EPA in its CWA § 402

regulations. Compare 33 C.F.R. § 328.3 (2008) and 40 C.F.R.

§ 232.2 (2008) with 40 C.F.R. § 122.2 (2008). In its exemption of waste treatment systems, the EPA regulations provide

that "[t]his exclusion applies only to manmade bodies of

water which neither were originally created in waters of the

United States . . . nor resulted from the impoundment of

waters of the United States." 40 C.F.R. § 122.2. Significantly,

however, that sentence was suspended by the EPA in 1980.

See 45 Fed. Reg. 48620 (July 21, 1980). At the time, the

agency indicated that it intended to promptly issue a revised

definition, see id., but it never did. Without that definitional

sentence for the term "waste treatment system," it is not obvious from the plain language of the regulation what the term

is intended to cover. Because the Corps’ definition relies on

the EPA definition, and because the EPA definition is ambiguous, the intent behind the Corps’ "waste treatment exception" is ambiguous.

The issue, then, is to determine whether the Corps’ interpretation of 33 C.F.R. § 328.3(a)(8) (2008) is "plainly erroneous or inconsistent with the regulation." Seminole Rock, 325

U.S. at 414 (1945). Appellants argue that the Corps is entitled

to Seminole Rock deference because it has consistently treated

stream segments and sediment ponds as "waste treatment systems" in accordance with longstanding EPA guidance on the

matter. OVEC contends, however, that we should follow the

OHIO VALLEY v. ARACOMA COAL CO. 67
district court and find that the Corps’ position is a post hoc

rationalization, created for the purposes of defending this litigation, and is thus entitled to no deference. As support for this

argument, OVEC points to the fact that none of the CDDs for

the four challenged permits included any reference to the

"waste treatment" exception when originally issued; only

when the permits were reissued after voluntary remand to the

Corps did the waste treatment language appear.

Notwithstanding the Seminole Rock principle that significant deference is due an agency’s interpretation of its own

regulations, such deference may not be required when the

agency’s advocated interpretation is one that it has just

adopted for the purpose of litigation and that is "wholly

unsupported by regulating, rulings, or administrative practice." Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212

(1988). The interpretation must reflect the agency’s fair and

considered judgment on the matter. See Auer v. Robbins, 519

U.S. 452, 462 (1997). To the extent that Appellees are right,

and the Corps only adopted this position as a litigation

defense, it is not entitled to Seminole Rock deference. However, the Corps argues that its position has been consistent

and consonant with longstanding EPA guidance.

As with much in this case, the history of the EPA’s and the

Corps’ positions on this issue is complicated. As noted earlier,

in 1980, the EPA suspended its definition of the term "waste

treatment system," found originally in 40 C.F.R. § 122.2, and

did not issue a revised definition. Almost a decade later, in

West Virginia Coal Association v. Reilly, 728 F. Supp. 1276

(S.D. W. Va. 1989)—a challenge by two coal mining associations and several mining companies to the EPA’s policies

strictly limiting the use of in-stream treatment of mining

waste—the EPA took the position that in-stream sediment

ponds and the waters above them are included in the definition of "waters of the United States" because they are an

impoundment of waters of the United States. The court upheld

this position, finding that it was not plainly erroneous or

68 OHIO VALLEY v. ARACOMA COAL CO.
inconsistent with the EPA’s regulations or with the CWA

itself. Id. at 1290-91.

The Reilly plaintiffs argued that the stream segments and

sediment ponds were excepted from § 402 regulation because

they fell under the Corps’ § 404 authority instead. Id. at 1285.

The court rejected this argument finding that, while the regulations themselves offered confusing guidance on the matter,

the Corps and the EPA had agreed that sediment-laden runoff

from the valley fills was subject to § 402 permitting requirements.33 Id. This Court affirmed the district court’s opinion in

an unpublished opinion. See West Virginia Coal Ass’n v.

Reilly, Nos. 90-234, 90-2040, 1991 U.S. App. LEXIS 9401,

at *14 (4th Cir. May 13, 1991) (agreeing with district court

that in-stream sediment ponds and the waters above them are

"waters of the United States").

Then, in a 1992 guidance document, the EPA indicated, in

the context of advising on an Alaskan gold mining project,

that impoundments "created by the discharge of fill material

. . . if permitted by the Corps under Section 404 for purposes

of creating a waste treatment system, would no longer be

waters of the U.S." Memorandum from LaJuana S. Wilcher,

Assistant Administrator for the EPA, to Charles E. Findley,

Director, Water Division, Region X, United States Army

Corps of Engineers, on Clean Water Act Regulation of Mine

Tailings Disposal (Oct. 2, 1992).

Finally, in March 2006, after this litigation began, the EPA

sent the Corps a letter in which the EPA states that, in the

context of Appalachian surface mining, "the waste treatment

system exclusion continues to apply to the creation or use of

a waste treatment system in waters below a valley fill permit33The creation of the sediment ponds themselves fall within the Corps’

§ 404 authority because their embankments are created through the placement of fill material at the bottom of the streams. See Reilly, 728 F. Supp.

at 1288. 

OHIO VALLEY v. ARACOMA COAL CO. 69
ted by the Corps under CWA § 404." Letter from Benjamin

H. Grumbles, Assistant Administrator for the EPA, to the

Hon. John Paul Woodley, Assistant Secretary of the Army

(Civil Works) (Mar. 1, 2006) (emphasis added) [hereinafter

"the EPA Letter"]. The EPA Letter goes on to note that,

because it is often impracticable to locate sediment ponds

directly below valley fills, the use of a stream segment to connect the fill and pond is "an unavoidable and necessary component of the treatment system." Id. The Corps then relied on

this letter to introduce the "waste treatment system" language

into the permits on voluntary remand.

The district court found, and OVEC now argues, that the

EPA Letter was a post hoc rationalization and did not constitute the "fair and considered judgment" of the EPA or, in turn,

the Corps. In support of its argument that the "waste treatment

system" interpretation was not a post hoc rationalization, the

Corps points to the fact that, over the twenty-five years that

the EPA and WVDEP have been issuing § 402 NPDES permits, those agencies have never required an NPDES permit

for the stream segments that are used in numerous surface

mining operations to link § 404-permitted valley fills to

downstream sediment ponds. Moreover, the WVDEP, which

has been operating an EPA-approved NPDES program since

1982, has also taken the position that the permitting of segment streams is within the Corps’ authority. (See Joint

Amicus Brief of the West Virginia Department of Commerce

and the West Virginia Department of Environmental Protection as Amici Curiae Supporting Appellants at 16.)

This kind of consistent administrative practice suggests that

the Corps’ and EPA’s position is not a post hoc rationalization. Cf. Bowen, 488 U.S. at 212 ("We have never applied the

principle [of deference] . . . to agency litigating positions that

are wholly unsupported by regulations, rulings, or administrative practice."). The EPA’s position in Reilly, at first glance,

seems difficult to reconcile with the position it and the Corps

now claim. But, the distinction lies in the fact that the Reilly

70 OHIO VALLEY v. ARACOMA COAL CO.
case arose in the context of the EPA’s oversight of West Virginia’s § 402 program. See 728 F. Supp. 1276.

In Reilly, the EPA was objecting to the fact that West Virginia, in issuing § 402 permits that allowed in-stream treatment ponds, had analyzed discharges from the ponds but had

not analyzed the impacts of creating the ponds themselves.

The EPA was not confronted in Reilly with a situation where

the treatment system was authorized by a § 404 permit issued

by the Corps.34 When the Corps exercises its § 404 authority

to permit the use of a stream segment as part of the treatment

system for fill runoff, it has allowed the temporary removal

of these waters from the definition of "waters of the United

States" only after analyzing the impacts of creating the system

and mitigating those impacts as necessary. Thus, a sediment

pond and stream segment waste treatment system authorized

by a § 404 permit is a treatment system "designed to meet the

requirements of the CWA." 40 C.F.R. § 232.2 (2008).

Even if the Corps’ "waste treatment system" argument was

a post hoc rationalization when it was first raised, once the

34The mining company plaintiffs in Reilly argued, in a motion for summary judgment, that the EPA did not have jurisdiction to regulate instream treatment facilities because regulatory authority rested with the

Secretary of the Army under CWA § 404. 728 F. Supp. at 1282. In

response, the EPA took the position that the ponds and the waters above

them were "waters of the United States" and within their regulatory jurisdiction because they were an impoundment of waters that would otherwise

be "waters of the United States." Id. at 1289-90. But the mining company

plaintiffs had not obtained a § 404 permit for their in-stream treatment

facilities, and it was not Corps action, but the actions of West Virginia’s

§ 402 NPDES regulatory authority, to which the EPA was taking exception. 

In fact, the EPA’s policy for in-stream treatment that the court was considering in Reilly allowed that exceptions to the EPA-mandated prohibition on in-stream treatment ponds would be made where there were no

other feasible alternatives to in-stream treatment and where the mine operator complied with the Corps’ CWA Guidelines. 728 F. Supp. at 1279-80

nn. 1-2. 

OHIO VALLEY v. ARACOMA COAL CO. 71
Corps reconsidered and reissued the permits on voluntary

remand, the justification was no longer post hoc and it is entitled to deference.35 When a court reviews an agency action,

the agency is entitled to seek remand "without confessing

error, to reconsider its previous position." SKF USA Inc. v.

United States, 254 F.3d 1022, 1028 (Fed. Cir. 2001). "[A]n

agency must be allowed to assess ‘the wisdom of its policy on

a continuing basis.’" Id. at 1030 (quoting Chevron, 467 U.S.

at 864). As the Supreme Court recently found in Long Island

Care at Home, Ltd. v. Coke, 127 S. Ct. 2339, 2349 (2007), "as

long as interpretive changes create no unfair surprise . . . the

change in interpretation alone presents no separate ground for

disregarding the Department’s present interpretation." Decades worth of administrative practice cannot constitute an

"unfair surprise." Because, to the extent there was a "change"

in written administrative policy, that change reflected the considered views and longstanding practice of the Corps and the

EPA, the Corps’ interpretation of the "waste treatment"

exception to its regulatory definition of "waters of the United

States" is entitled to deference. See id. at 2349.

The final step in the combined Chevron and Seminole Rock

analysis is to determine whether the agency’s interpretation of

the statute is reasonable and entitled to deference. In this case,

we must determine whether, considering Congress’ intent for

the CWA, it was reasonable for the Corps to conclude that

stream segments connecting valley fills to sediment ponds are

"waste treatment systems" and not "waters of the United

States."

In making this determination, we must first appreciate the

statutory tightrope that the Corps walks in its permitting decisions. In passing the CWA, Congress aimed "to restore and

maintain the chemical, physical, and biological integrity of

35The CDDs accompanying the reissued permits expressly reference the

applicability of the waste treatment exception to the stream segments. (See

J.A. 1252, 1729, 2267, 3562-63.) 

72 OHIO VALLEY v. ARACOMA COAL CO.
the Nation’s waters." 33 U.S.C. § 1251(a) (2000). But, in

passing SMCRA, Congress sought to "strike a balance

between protection of the environment and agricultural productivity and the Nation’s need for coal as an essential source

of energy." 30 U.S.C. § 1202(f)(2000). The Corps, in permitting sediment ponds and accompanying stream segments

under its § 404 authority, is attempting to harmonize the two

statutes’ goals: ensuring that mining operations can proceed

while maintaining the highest level of water quality possible

outside of the mining area.

Sediment ponds represent the "best technology currently

available" for the treatment of sedimentary runoff from surface mining valley fills. In fact, the regulations of the Department of the Interior’s Office of Surface Mining specifically

contemplate the use of in-stream sediment ponds. 30 C.F.R.

§ 816.46(c) (2008). While ideally these ponds would be

located immediately adjacent to the fills, the steep Appalachian terrain often does not allow this result. The topographical realities of the area make stream segments a necessary

component of the construction of a waste treatment system for

valley fill runoff. (See, e.g., J.A. 653.) This system, in turn,

is necessary to ensure that water released from the mining

area into existing streams meets CWA § 402 standards.

It is undisputed in this litigation that the Corps has the

authority under CWA § 404 to permit the filling of jurisdictional waters to move runoff away from valley fills. See Kentuckians for the Commonwealth v. Rivenburgh, 317 F.3d 425

(4th Cir. 2003). It is also undisputed that the Corps has

authority to permit the construction of sediment ponds to treat

that runoff before it is discharged back into jurisdictional

waters. OVEC asks us now to take the position that it would

be an unreasonable construction of the CWA to allow the

Corps to also use its § 404 authority to permit the stream segments that must, as a practical reality, be used to move runoff

from the fill to the sediment ponds. We decline to do so, and

find instead that the Corps’ interpretation of its authority was

OHIO VALLEY v. ARACOMA COAL CO. 73
reasonable in light of the CWA and entitled to deference. The

district court’s grant of partial summary judgment on OVEC’s

claim for declaratory relief is reversed.

VI.

Since the district court’s rulings in this case, the Corps has

issued five new individual CWA § 404 permits for surface

coal mines in West Virginia. OVEC now requests that this

court take judicial notice of these permit decision documents,

as public records relevant to the matter at issue. The Corps

does not object to our taking notice of the existence of the

documents, but points out that OVEC actually seeks notice of

its own interpretation of the contents of those documents. The

parties clearly and reasonably disagree about the meaning to

be ascribed to these new decision documents, and we therefore decline to judicially notice them. See Fed. R. Evid.

201(b); Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239

(4th Cir. 1989).

VII.

For the foregoing reasons, we reverse and vacate the district court’s March 23, 2007, opinion and order rescinding the

four challenged permits and vacate the district court’s injunction of activity under those permits. We also reverse the district court’s June 13, 2007, order granting declaratory relief to

OVEC on the issue of whether the stream segments used to

connect valley fills to downstream sediment ponds are properly characterized as "waters of the United States." Finally,

we deny OVEC’s motions for judicial notice. We remand for

further proceedings consistent with this opinion.

IT IS SO ORDERED

MICHAEL, Circuit Judge, dissenting in part and concurring

in part:

The U.S. Army Corps of Engineers (Corps) has authorized

the filling of twenty-three valleys and more than thirteen

74 OHIO VALLEY v. ARACOMA COAL CO.
miles of headwater streams in Southern West Virginia in connection with four mountaintop removal mining operations.

Despite its failure to fully assess the impact that the proposed

valley fills will have on the aquatic ecosystem, the Corps

claims that, after mitigation measures have been implemented, the valley fills will not significantly degrade the

waters of the United States or have a significant adverse

impact on the human environment. Because the record in this

case does not support the Corps’ claims that the assessments

conducted and the mitigation measures imposed were adequate to fulfill the requirements of the Clean Water Act

(CWA) and the National Environmental Policy Act (NEPA),

I respectfully dissent from part IV.B of the majority’s opinion. 

The Corps’ regulations implementing the CWA’s § 404(b)

dredge and fill program require the Corps to assess the effect

that a proposed fill will have "on the structure and function of

the aquatic ecosystem and organisms." 40 C.F.R. § 230.11(e).

In upholding the Corps’ interpretation of its obligations under

§ 230.11(e), the majority declines to give effect to the unambiguous requirements of the regulations. The majority—

agreeing with the Corps—concludes that an evaluation of

stream structure may substitute for an evaluation of function.

This interpretation, however, is impossible to reconcile with

the plain language of the regulations, which clearly mandates

that the Corps assess both structure and function. The majority then accepts the Corps’ alternative argument that the (nonfunctional) stream assessment protocols used by the Corps

provided sufficient information about stream function to satisfy the demands of § 230.11(e). But because the majority has

failed to identify the stream functions to be measured under

§ 230.11(e), the majority cannot meaningfully evaluate the

adequacy of the stream assessment protocols that were used.

The majority’s analysis of the mitigation approved by the

Corps also overlooks the plainly stated requirements of

§ 230.11(e). Rather than basing its decision on the (binding)

OHIO VALLEY v. ARACOMA COAL CO. 75
language of the regulations, the majority focuses instead on

the Corps’ compliance with an internal guidance document

that is at odds with the regulations’ clear requirements. The

effect is to completely undermine the goal of mitigation:

replacement of what is being lost. Because the Corps has

offered no basis on which to conclude that the environmental

impacts of the valley fill projects as mitigated will be insignificant, this court should reject the mitigation as inadequate

under the CWA and NEPA. 

For these reasons, I would affirm the district court’s judgment rescinding the permits and direct that court to remand

the permits to the Corps for further consideration consistent

with the requirements of § 230.11(e) and NEPA. 

I concur in the parts of the majority opinion upholding the

scope (or physical boundary) of the Corps’ NEPA analysis

(part IV.A) and the Corps’ interpretation of its regulatory definition of "waters of the United States" (part V).

I.

Before the Corps can issue a dredge or fill permit, it must

determine, pursuant to its § 404(b) regulations, the "nature

and degree of effect that the proposed discharge will have,

both individually and cumulatively, on the structure and function of the aquatic ecosystem and organisms." 40 C.F.R.

§ 230.11(e). As the Corps points out, "[t]he Guidelines [or

regulations] do not . . . define the ‘function of the aquatic

ecosystem’ or provide any guidance on how that function is

to be measured." Corps’ Br. at 35. The Corps therefore contends that under its internal guidance documents, its district

officials may "discharge their responsibility to analyze stream

function by exercising their ‘best professional judgment’

when it is not feasible to conduct a full functional assessment." Corps’ Br. at 35.

76 OHIO VALLEY v. ARACOMA COAL CO.
A.

The Corps, purporting to exercise its "best professional

judgment," claims initially that stream structure can be measured as a surrogate for function. Corps’ Br. at 36. The majority accepts the Corps’ argument, stating that "[i]n this case,

the Corps, using its best professional judgment, used stream

structure as a surrogate for assessing stream function". Ante

at 35. Neither the Corps nor the majority explains how the

assessment of structure as a surrogate for function can be

squared with the plain language of the regulations. If stream

structure were truly an adequate surrogate for stream function,

the Corps and the majority should offer some explanation as

to why § 230.11(e) explicitly requires assessments of the

effects of proposed fills on both the structure and function of

the aquatic ecosystem and organisms. One of the most basic

rules of statutory interpretation is that all of the words in a

statute must be given effect. PSINet, Inc. v. Chapman, 362

F.3d 227, 232 (4th Cir. 2004) ("General principles of statutory

construction require a court to construe all parts to have

meaning and to reject constructions that render a term redundant."); Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979)

("In construing a statute we are obliged to give effect, if possible, to every word Congress used."). It is not within the

bounds of permissible interpretation to say that the word

"function" as used in § 230.11(e) is merely a redundancy for

"structure."1

1The majority contends that I have not afforded the Corps the appropriate level of deference in interpreting its regulations. Ante at 35 n.16. The

majority does acknowledge, however, that the Corps may not proffer an

interpretation that is "plainly erroneous or inconsistent with the regulation." Auer v. Robbins, 519 U.S. 452, 461 (1997). Of course, "[t]he agency’s interpretation need not be the best or most natural one by grammatical

or other standards. Rather, it need only be a reasonable construction of the

regulatory language." Dist. Mem’l Hosp. of Southwestern North Carolina,

Inc. v. Thompson, 364 F.3d 513, 518 (4th Cir. 2004) (internal quotations

and citations removed). 

OHIO VALLEY v. ARACOMA COAL CO. 77
The argument that "structure" is a surrogate for "function"

is further undermined by the fact that a separate functional

stream assessment protocol is currently being developed by

the Environmental Protection Agency (EPA). Once the protocol is completed, the Corps will use it to conduct § 230.11(e)

functional analyses for new permit applications. This functional stream protocol will direct the assessment of numerous

stream functions (including nutrient uptake and transport,

organic matter retention, and downstream export of organic

matter) that the Corps did not measure for any of the permit

applications at issue in this appeal. If existing schemes used

by the Corps to assess stream structure were adequate surrogates for a functional assessment protocol, it would make little sense for the EPA to be currently undertaking the

expensive and time-consuming effort of developing an independent functional protocol. 

The Corps’ determination that stream structure can be used

as a surrogate for function under § 230.11(e) constitutes a

clear abuse of discretion. This court should not uphold a construction that gives no effect to a central term in the controlling regulations. 

B.

The Corps, perhaps recognizing the weakness of its position, does not rely entirely on the argument that structure is

a surrogate for function. It contends at times in its opening

brief that the stream assessments conducted here were suffiAs I have explained, the Corps’ contention that a structural assessment

may substitute for a functional one is wholly inconsistent with

§ 230.11(e)’s clear mandate that the Corps assess both structure and function. Further, in light of the Corps’ failure to define "function" for purposes of § 230.11(e), its unsubstantiated assertion that the structural

assessments used in this case provide adequate information about stream

function cannot be upheld as a reasonable construction of its regulations.

See Dist. Mem’l Hosp., 364 F.3d at 518. 

78 OHIO VALLEY v. ARACOMA COAL CO.
cient to satisfy both the structure and function inquiries mandated by § 230.11(e). The majority attempts to uphold the

Corps on this alternative ground as well. Unfortunately,

because the majority does not come to grips with the plain

language of § 230.11(e), its review lacks both a defined scope

and a clear legal standard. 

The majority credits the Corps for using "detailed measurements provided by [permit applicants] on the benthic

macroinvertebrate population to draw conclusions about the

level of stream function at the proposed fill sites." Ante at 35.

The majority also credits the Corps for making use of the

EPA’s Rapid Bioassessment Protocol (RBP) and the West

Virginia Stream Condition Index (WVSCI or Index). But

because the majority has not identified the relevant stream

functions to be measured, it is not possible to say whether

these assessment protocols provide relevant information. Further, by failing to acknowledge or employ in its review the

relevant language from the regulations that requires the Corps

to assess the "nature and degree of effect" that the proposed

fills will have on stream function, the majority affords itself

no legal basis for testing the sufficiency of any assessment of

stream function.

To the extent that the record provides some indication of

the appropriate meaning of "function" as used in § 230.11(e),

the Corps’ assessment of function was demonstrably inadequate. There is some dispute among the parties as to which

stream functions are appropriately covered by § 230.11(e).

However, as mentioned above, the EPA (with Corps’

approval) is in the process of developing a functional assessment protocol for streams in West Virginia’s Huntington District that will serve as the standard for future § 230.11(e)

functional assessments. Hence, the most logical place to begin

an inquiry into the meaning of the term "function" in

OHIO VALLEY v. ARACOMA COAL CO. 79
§ 230.11(e) is with EPA’s proposed (or draft) stream assessment protocol.2

 Under the proposed protocol: 

2The majority points out that any attempt by this court "to define stream

function beyond these guidelines [that is, the language in § 230.11(e)

itself] would certainly be inappropriate judicial intrusion into the Corps

and EPA’s sphere of authority." Ante at 37 n.19. I do not disagree. The

majority’s observation underscores precisely why the proper judicial resolution of this issue would have been to conclude that the Corps abused its

discretion in failing to offer an interpretation of the term "function" as

used in § 230.11(e) that is not "plainly erroneous or inconsistent with the

regulation." Auer, 519 U.S. at 461. So long as the Corps declines to provide a construction that gives meaning to the operative terms in its regulations, this court cannot uphold the Corps’ actions. 

I have engaged in what the majority calls an "inappropriate judicial

intrusion" only to point out the shortcomings of the majority’s analysis.

The majority has determined that the Corps did not abuse its discretion in

approving the stream assessments conducted in this case. The majority

upholds the Corps in spite of the agency’s unwillingness to define the term

"function." Any evaluation of the majority’s (or the Corps’) determination

that the assessment of stream function was adequate, however, necessarily

requires giving some meaning to the term "function." 

According to the majority, ante at 37 n.19, "the only clues § 230.11(e)

offers regarding the stream functions to be measured are the . . . factors"

listed in one sentence in § 230.11(e). The sentence provides in full: "Consideration shall be given to the effect at the proposed disposal site of

potential changes in substrate characteristics and elevation, water or substrate chemistry, nutrients, currents, circulation, fluctuation, and salinity,

on the recolonization and existence of indigenous aquatic organisms and

communities." 40 C.F.R. § 230.11(e) (2006). The majority mistakes the

significance of these "factors." They are not stream functions. The term

"function" refers to the "role, duty, work" or "purpose" of a thing. Webster’s Third New Int’l Dictionary 920 (2002). The factors listed in

§ 230.11(e) are merely stream characteristics (or attributes), and

§ 230.11(e) requires the Corps to analyze the effects that changes to these

stream characteristics will have on the "recolonization and existence of

indigenous aquatic organisms and communities." Compliance with this

sentence cannot be determinative of whether the Corps has adequately

analyzed the effects of the proposed fills on stream function. 

Since the factors identified by the majority cannot constitute the stream

functions contemplated by § 230.11(e), there is no reason to discount the

relevance of the proposed functional protocol currently under development

80 OHIO VALLEY v. ARACOMA COAL CO.
Contractor activities would involve field and laboratory studies aimed at conventional measurement of

headwater stream functional processes in mined and

un-mined watersheds. These functional processes

can include, but are not limited to: 1) organic matter

decomposition rates; 2) nutrient transport and

uptake; 3) primary production and metabolism; 4)

secondary production; and 5) organic matter retention and transport.

J.A. 1836.3

A look at only those functions listed by the EPA in its proposed functional stream assessment protocol reveals that the

assessments carried out by the Corps were deficient. The data

provided by the EPA’s RBP and the WVSCI, the protocols

used by the Corps in this case, are insufficient to assess the

for the Huntington District of West Virginia. Until the Corps itself identifies a specific set of functions to be measured, nothing could be more relevant to determining the meaning of "function" in § 230.11(e) than the list

of the stream functions proposed to be measured in future § 230.11(e)

functional analyses. Consequently, nothing could be more useful in

reviewing the adequacy of the assessment protocols used in this case than

this proposed list of stream functions. The Corps should not be rewarded

for its recalcitrance in defining function and for its lengthy delay in developing a usable functional assessment protocol for West Virginia. 

3

If we pieced together the stream functions that the Corps itself identifies in the Combined Decision Documents (CDDs) in this case, the list is,

if anything, more inclusive than the preliminary list proposed to be measured by the EPA. Specifically, the Corps in the Black Castle CDD states

that: "Some important functions of . . . headwater streams include the

maintenance of natural discharge regimes, the regulation of sediment

export, the retention of nutrients, the processing of terrestrial organic matter, and the exportation of water nutrients and organic matter to downstream areas." J.A. 1823; see also, Camp Branch CDD, J.A. 1319 (same

language). The Corps also observes in its § 230.11(e) analysis in the

Republic No. 2 CDD that nutrient cycling, organic matter dynamics, respiration, and primary and secondary production are functions "typically

found in scientific research analysis." J.A. 3570. 

OHIO VALLEY v. ARACOMA COAL CO. 81
bulk of the functions listed by the EPA to a degree that satisfies the requirements of § 230.11(e).

Indeed, the Corps, in its CDD for the Republic No. 2 mine,

acknowledges the limitations of using the EPA’s RBP to

assess stream function:

While the rapid bioassessment protocol does not provide a detailed analysis of nutrient cycling, organic

matter dynamics, respiration, measurement of primary/secondary production, as is typically found in scientific research analysis[,] it does provide baseline

data that can be used to analyze chemical, physical,

and biological conditions of the stream channel.

J.A. 3570. The functions about which the RBP fails to provide

detailed analysis are the very functions the EPA’s proposed

functional analysis would evaluate. And the plain language of

§ 230.11(e)—requiring an assessment of the "nature and

degree of effect that the proposed discharge will have . . . on

the structure and function of the aquatic ecosystem and

organisms"—makes clear that stream function must be

assessed in some detail. The Corps does not explain how the

baseline data on stream condition generated by the RBP will

assist in any way in measuring the (actual) stream functions

for which the RBP provides no detailed analysis. Accordingly, the RBP appears to be an inadequate substitute for a

functional assessment protocol.

The WVSCI fares only slightly better. The Index purports

to measure stream "quality" and notes that its surveys "are

used to measure the attainment of biological integrity." A

Stream Condition Index for West Virginia Wadeable Streams,

at 3 (July 21, 2000), available at http://www.wvdep.org/Docs/

536_WV-Index.pdf. The Index asserts that it is "an appropriate indicator of ecological quality, reflecting biological

responses to changes in physical habitat quality, the integrity

of soil and water chemistry, geologic processes, and land use

82 OHIO VALLEY v. ARACOMA COAL CO.
changes (to the degree that they affect the sampled habitat)."

Id. at 4. It makes no mention of organic matter processing or

retention, primary or secondary production, nutrient retention,

cycling, transport or uptake, or respiration. And nowhere does

it claim to be a functional assessment protocol.

It is not enough that the Corps’ expert Dr. Mindy Armstead

testified that the WVSCI’s EPT Index "was a good surrogate

for the functional measurement of secondary biomass," J.A.

4424-25, one of the functions to be covered by the EPA’s

functional assessment protocol. Measurement of a single

function does not make the Index an adequate replacement for

the required functional assessment. For decomposition and

primary production, two other functions to be measured under

the EPA’s proposed functional assessment protocol, the

Corps’ experts claim only that the WVSCI provides information about their presence or absence. The mere ability of an

assessment protocol to detect the presence or absence of a

stream function is insufficient to fulfill the more exacting

"[d]etermine the nature and degree of effect" language of

§ 230.11(e). And for the remaining functions slated to be

measured under the EPA’s functional stream assessment

protocol—nutrient uptake and processing, organic matter

retention, and downstream export of organic matter—the

Corps makes no claim that the WVSCI provides any relevant

information at all.

The majority opinion considers only one stream function—

nutrient cycling—and concedes that the Corps’ assessment of

that function was deficient: "The Corps’ CDDs themselves

acknowledge this shortcoming, noting that the effects of filling ephemeral streams on nutrient cycling are difficult to

measure and that there is a lack of consensus among the relevant agencies about how best to collect quantitative evidence

regarding these functions." Ante at 36. The majority excuses

this deficiency, noting that: "[t]o compensate for these effects

. . . the Corps’ permitting decisions call for limiting impacts

to channels that do not sustain long periods of flow and for

OHIO VALLEY v. ARACOMA COAL CO. 83
establishing a riparian buffer around mitigation sites." Ante at

36. Unfortunately, the Corps’ attempt to minimize impacts to

stream functions that it has failed to assess sufficiently has no

bearing on whether it has met its obligations under

§ 230.11(e) to "[d]etermine the nature and degree of effect"

on stream function. 

Finally, and most fundamentally, in asserting that the proposed mitigation measures meet regulatory requirements, the

Corps implicitly concedes that the stream assessment protocols used in this case failed to sufficiently assess stream function. The Corps’ Regulatory Guidance Letter (RGL) provides

that "Districts should require compensatory mitigation projects for streams to replace stream functions where sufficient

functional assessment is feasible." J.A. 1174. Where sufficient

functional assessment is not feasible, the RGL permits the

Corps to rely on a substitute one-to-one linear stream foot

mitigation that does not specifically account for lost stream

function. In this case, the Corps does not claim that its mitigation measures will replace lost stream functions. The Corps

asserts in its opening brief that its "approach is not arbitrary

and capricious just because the precise functions of ephemeral

or intermittent streams are not being replaced" by the mitigation measures required in this case. Corps’ Br. at 47. Instead,

the Corps elects to rely on the substitute one-to-one mitigation

ratio. By choosing to rely on one-to-one mitigation rather than

attempting to replace lost function, the Corps implicitly but

clearly concedes that the EPA’s RBP and the WVSCI did not

provide for an adequate assessment of stream function. If

these protocols had generated the requisite data for a sufficient functional assessment, the Corps could not have logically invoked the RGL’s one-to-one mitigation provisions.

Since the Corps’ actions show that it does not believe its own

contention that it has sufficiently assessed stream function,

this court is under no obligation to believe it either. 

II.

On the issue of the adequacy of the Corps’ proposed mitigation measures, the majority again errs in overlooking the

84 OHIO VALLEY v. ARACOMA COAL CO.
plain language of the relevant regulations. The majority

chooses to rely on internal Corps guidance documents that are

inconsistent with, and must therefore yield to, the clear

requirements of the regulations. 

A.

The valley fills will bury more than 68,000 feet of intermittent and ephemeral headwater streams. The Corps does not

dispute that, absent mitigation measures, the adverse impacts

of the proposed projects would be significant, and an Environmental Impact Statement (EIS) would therefore be required

under NEPA. The Corps instead asserts that the mitigation

measures it has approved are sufficient to reduce adverse

impacts of the fills below the threshold of significance and

avoid significant degradation of waters of the United States.4

4The majority quotes 40 C.F.R. § 230.10(d)—providing that a § 404

permit cannot issue "unless appropriate and practicable steps have been

taken which will minimize potential adverse impacts of the discharge [of

fill material] on the aquatic ecosystem"—but does not mention other relevant provisions of section 230.10 that should also inform its analysis. See

ante at 39. 

Read in its entirety, 40 C.F.R. § 230.10 requires that a permitted dredge

or fill activity not only include appropriate and practicable steps to minimize potential adverse impacts, but also that the discharge result in no significant degradation of waters of the United States, taking into account

required mitigation. 

Section 230.10 describes four restrictions on discharge, all of which

must be met before a dredge or fill permit can issue. Section 230.10(c)

provides that "no discharge of dredged or fill material shall be permitted

which will cause or contribute to significant degradation of the waters of

the United States." 40 C.F.R. § 230.10(c) (2006). 

Section 230.12(a)(2) (2006) allows the Corps to permit a dredge or fill

activity as "complying with the requirements of these Guidelines with the

inclusion of appropriate and practicable discharge conditions (see Subpart

H) to minimize pollution or adverse effects to the affected aquatic ecosystems." But paragraph (a)(3) makes clear that a project must be

"[s]pecified as failing to comply with the requirements of these Guidelines

OHIO VALLEY v. ARACOMA COAL CO. 85
The Corps bases these assertions on the anticipated success of

a combination of stream creation and enhancement of existing

stream channels. The Corps does not claim that the proposed

mitigation will replace lost stream function; rather the mitigation will replace or enhance at least as many stream feet as the

valley fills will bury.

To justify allowing the Corps to approve this so-called oneto-one mitigation in lieu of requiring the replacement of lost

stream function, the majority relies on the language of a

Memorandum of Agreement (MOA) between the Corps and

the EPA and an internal Corps’ Regulatory Guidance Letter

(RGL). 

From a legal standpoint, the majority’s discussion of the

MOA and RGL is largely beside the point. To the extent that

the MOA and RGL are inconsistent with the plain language

of the regulations, the regulations control. The MOA itself

states that it "does not change the substantive requirements of

the Guidelines [regulations]. It is intended to provide guidance regarding the exercise of discretion under the Guidelines." J.A. 1165. Similarly, RGLs are "‘issued without notice

and comment and do not purport to change or interpret the

regulations applicable to the section 404 program . . . [and]

are not binding, either upon permit applicants or Corps District Engineers." Northwest Bypass Group v. U.S. Army Corps

of Eng’rs, 470 F.Supp.2d 30, 51 (D. N.H. 2007) (quoting

Envtl. Def. v. U.S. Army Corps of Eng’rs, No. 04-1575(JR),

2006 WL 1992626 at *7 (D.D.C. July 14, 2006).

where . . . (ii) [t]he proposed discharge will result in significant degradation of the aquatic ecosystem under § 230.10(b) or (c) . . . ." 

Consequently, when § 230.10 is taken as a whole, it is apparent that for

a discharge of dredge or fill material into waters of the United States to

be permitted, not only must appropriate steps have been taken to minimize

adverse impacts, but the Corps must also find that, once appropriate mitigation measures are accounted for, the discharge will not significantly

degrade the waters of the United States. 

86 OHIO VALLEY v. ARACOMA COAL CO.
An analysis of the sufficiency of the mitigation in this case

must begin with the provisions that are truly mandatory: those

in the regulations. Compliance with 40 C.F.R. § 230.11(e) is

non-discretionary. The Corps cannot issue a § 404(b)(1) permit without first assessing the "nature and degree of effect

that the proposed discharge will have, both individually and

cumulatively, on the structure and function of the aquatic

ecosystem and organisms." Thus, when confronted with a

decision about the appropriate mitigation measures to require,

the Corps should never find itself in a position where it has

failed to sufficiently assess stream function; § 230.11(e)

always requires the Corps to conduct this assessment. Considered in light of the clear requirement of § 230.11(e), the provision in the Corps’ RGL that purports to permit one-to-one

mitigation where a sufficient stream functional assessment is

not feasible can never be properly triggered. Simply put, the

Corps cannot rely on an illegal provision in its RGL to justify

a failure to mitigate for lost stream functions. 

The majority’s analysis skirts the requirements of

§ 230.11(e). First, the majority observes that "a full functional

assessment protocol is not yet available to the Corps." Ante at

43. It then concludes that under the Corps’ RGL, "where a full

functional assessment is not feasible, the only compensatory

mitigation measure the Corps must require in a permitting

decision is stream replacement on a one-to-one basis." Ante at

43. The majority’s approach is unsupportable. Whatever it

means to sufficiently assess stream function, it should mean

the same thing under both § 230.11(e) of the regulations and

the Corps’ MOA and RGL. To allow the Corps to interpret

sufficiency of assessment differently for purposes of measuring function and determining appropriate mitigation wholly

undermines the purposes of mitigation. Indeed, the MOA

itself states that "[t]he determination of what level of mitigation constitutes ‘appropriate’ mitigation is based solely on the

values and functions of the aquatic resource that will be

impacted." J.A. 1166. It is paradoxical to conclude that the

(largely structural) assessments carried out as part of the

OHIO VALLEY v. ARACOMA COAL CO. 87
Corps’ § 230.11(e) analysis adequately measured stream function and to simultaneously conclude that these same assessments provided insufficient data on stream function to require

mitigation to replace lost function. The majority’s construction of the Corps’ functional assessment and mitigation

requirements defeats the basic goal of the MOA, the RGL,

and compensatory mitigation.

B.

Since the Corps cannot properly rely on its RGL to avoid

mitigating for lost stream function, we would ordinarily look

next at whether the mitigation measures required by the Corps

will adequately replace lost function. This inquiry is premature in the present instance, however, because the Corps did

not engage in the functional analysis required by 40 C.F.R.

§ 230.11(e). Thus, even if we credited the Corps’ almost

wholly unsubstantiated assertion that the new stream creation

projects required in the CDDs will create working streams,

the CMPs and CDDs offer no guarantees that the newly created streams will replace lost headwater stream functions the

Corps has failed to quantify. The Corps therefore acted in

direct contravention of the applicable regulations.5

Furthermore, even under the majority’s construction of the

Corps’ mitigation duties (allowing for one-to-one mitigation

where sufficient functional assessment is not feasible), there

5The Corps does in various places make claims that the mitigation it

requires will replace lost stream functions. However, the functions that the

Corps claims will be replaced—movement of water, movement of sediment, nutrient cycling, and organic matter retention—only partially coincide with the headwater functions that the Corps admits will be lost under

the valley fills, namely, maintenance of natural discharge regimes, regulation of sediment export, retention of nutrients, processing of terrestrial

organic matter, and exportation of water nutrients and organic matter to

downstream areas. Further, the Corps has offered virtually no evidence to

support its claim that the mitigation measures will replace lost stream

functions. 

88 OHIO VALLEY v. ARACOMA COAL CO.
is good reason based on the record before us to question

whether the mitigation will prevent significant degradation of

waters of the United States. As the majority concedes, ante at

45, the Corps offers virtually no scientific support for the viability of creating working streams from scratch, particularly

headwater streams. The Corps provides evidence of a single

successful stream creation project in Kentucky, but this was

not a headwater stream. Here, the bulk of the proposed stream

creation in the mitigation plans is to take place in the sediment ditches on the valley fills, where the former headwater

streams were located. According to the Draft EIS for Mountaintop Removal Mining and Valley Fills, a document jointly

authored by the Corps and other agencies:

to date functioning headwater streams have not been

re-created on mined or filled areas as part of mine

restoration or planned stream mitigation efforts.

Most on-site mitigation construction projects have

resulted in the creation of palustrine wetlands that

resembled ponds.

J.A. 862. The Draft EIS adds that "it is not known whether the

organic matter processing that occurs in created wetlands

would mimic the processing found in a natural stream system." J.A. 863. 

In addition to the lack of evidence about the viability of

stream creation, the U.S. Fish and Wildlife Service (USFWS)

and its West Virginia Field Office (WVFO) submitted a joint

comment on the Laxare East permit expressing a continued

belief that it is not possible to fully replace the critical aquatic

and terrestrial ecosystem functions of healthy headwater

streams. These agencies also commented that they were

unaware of any scientific support for the concept that onbench sediment ditches can be considered biologically equivalent to, or even rough approximations of, flowing streams.

These comments undercut the Corps’ contention that the mitigation will produce its advertised results.

OHIO VALLEY v. ARACOMA COAL CO. 89
In sum, the regulations in 40 C.F.R. Part 230 do not allow

the Corps to engage in one-to-one mitigation in this case to

claim it has achieved no significant degradation of waters of

the United States. Even if they did, the Corps has not provided sufficient evidence to allow this court to conclude that

the impacts of the fills will truly be insignificant.

C.

Pursuant to NEPA an agency engaging in a major federal

action may decline to issue a comprehensive environmental

impact statement (EIS) only if, after mitigation measures are

accounted for, the agency concludes the action (or project)

will result in no significant adverse impact to the human environment. See 42 U.S.C. § 4332(2)(C), 40 C.F.R. § 1501.4(e).

Because, as I have explained, the Corps has failed to establish

that the permitted valley fill projects will not significantly

degrade the waters of the United States, I must also conclude

that the Corps has likewise failed to establish that the projects

will have no significant adverse environmental impact. Consequently, the Corps has not justified its decision to decline

to issue an EIS for the fill projects, and NEPA’s requirements

have not been satisfied.

III.

Today’s decision will have far-reaching consequences for

the environment of Appalachia. It is not disputed that the

impact of filling valleys and headwater streams is irreversible

or that headwater streams provide crucial ecosystem functions. Further, the cumulative effects of the permitted fill

activities on local streams and watersheds are considerable.

By failing to require the Corps to undertake a meaningful

assessment of the functions of the aquatic resources being

destroyed and by allowing the Corps to proceed instead with

a one-to-one mitigation that takes no account of lost stream

function, this court risks significant harm to the affected

watersheds and water resources. We should rescind the four

90 OHIO VALLEY v. ARACOMA COAL CO.
permits at issue in this case until the Corps complies with the

clear mandates of the regulations. First, the Corps must adequately determine the effect that the valley fills will have on

the function of the aquatic ecosystem. Second, based on this

determination, the Corps must certify that the fills, after mitigation is taken into account, will result in no significant degradation of waters of the United States and no significant

adverse impact to the human environment.

OHIO VALLEY v. ARACOMA COAL CO. 91