Commodities & Metals

EPA Wins in Coal Mine Dispute: Is Keystone XL Next?

Mountain top coal mine
Thinkstock
The U.S. Environmental Protection Agency (EPA) last year invalidated a 2007 permit issued by the Army Corps of Engineers to a subsidiary of Arch Coal Inc. (NYSE: ACI) allowing the company to build — or rather dig up — a mountaintop mine in West Virginia. On Monday, the U.S. Supreme Court let stand a lower court ruling in favor of the EPA, implying that the agency’s authority under the Clean Water Act can be used to invalidate any permit, no matter when it was granted.

The EPA has been a consistent critic of the U.S. State Department’s environmental impact studies related to the construction of the Keystone XL pipeline. One objection the EPA raised to Keystone XL in 2013 was its potential impact on the Ogallala Aquifer. The pipeline has been rerouted around the aquifer, but the threat to groundwater supplies has not been entirely mitigated, and the EPA could conceivably invoke its newly strengthened authority to stop the Keystone XL regardless of how the State Department rules on the pipeline’s construction.

Industry trade groups and coal-mining states worked to get the EPA’s ruling reversed, claiming that the agency had overstepped its regulatory authority. In this particular case, the petitioners claimed that EPA’s authority under the Clean Water Act does not in any way give the agency the power retroactively to invalidate a permit that already had been granted.

Monday’s Supreme Court ruling adds even more interest to the drama surrounding the proposed 830,000-barrel per day Keystone XL pipeline. It is not hard to imagine a scenario in which the State Department okays the pipeline only to have the EPA squelch it. A remote possibility, perhaps, but real nonetheless.

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