Tuesday, October 28, 2014

The EPA and the Clean Water Act – Don't Hate the Player, Hate the Game

By Isaak Hurst

On August 4, 2014, a tailings dam ruptured at the Mount Polley mine site, sending an initial estimate of 14.5 million cubic meters of mine waste into the salmon-rich waters of British Columbia’s Fraser River. Shortly after the spill, Imperial Metals Corp., the owner of the mine, revised these numbers to 25 million cubic meters of waste. By way of comparison, if this waste were oil, the amount spilled would be enough to power the whole of Great Britain for 100 days; fill 78 supertankers; or replicate the Exxon Valdez catastrophe 208 times over. Indeed, with numbers like that, there is no question that the Mount Polley incident will be one of the most disastrous environmental events in modern history.

Naturally, Alaska has no interest in seeing its salmon populations decimated by an incident like the one above. Concurrently, Alaska has no interest in shutting down its mining operations out of fear of replicating the above incident. After all, the cumulative production value of Alaska’s mining industry is around $3.4 billion annually, which makes Alaska’s minerals its second largest export commodity after oil. Moreover, Alaska’s mining industry provides nearly 4,600 Alaskans with jobs (many of which are directly tied to maritime transportation and trade), which creates $360 million in payroll every year. Indeed, for better or for worse, Alaska’s economic wagon is hitched to its mining industry.

In recent months, however, a wave of Federalist panic has hit Alaska’s mining industry. It seems that, in addition to unleashing 25 million cubic meters of waste, the Mount Polley mine disaster has unleashed a barrage of congressional overreach arguments concerning the Environmental Protection Agency (EPA). The concern being that the EPA will use the Clean Water Act as a regulatory means to shut down or severely restrict mining activity in Alaska in an effort to prevent a Mount Polley incident from occurring in Alaska. Most of these concerns about congressional overreach, however, are unwarranted.

The Clean Water Act
Under the Clean Water Act, the US Army Corps of Engineers is authorized to issue permits for discharged dredged or fill material at specific sites in US waters. However, a particular section of the Clean Water Act, 404(c), grants the EPA unilateral veto authority over the site selected by the Army Corps of Engineers to receive the discharge. Section 404(c) states in relevant part:
The [EPA] Administrator is authorized to deny or restrict the use of any defined area for specification as a disposal site, whenever he determines… if the discharge of such materials into such areas will have unacceptable adverse effects on municipal water supplies, shellfish beds, and fishery areas (including spawning and breeding areas), wildlife, or recreational areas.

Put another way, 404(c) authorizes the EPA to withdraw any approved discharge site permit whenever it determines the discharge will have an adverse effect on the environment. Incidentally, like most legal arguments, millions of dollars depend on the interpretation of a single word—whenever.

The Mingo Logan Decision
The “whenever” term of art was challenged in Mingo Logan Coal Company v. EPA, in 2013. There, a West Virginia coal company (Mingo Logan) applied for a 404 permit under the Clean Water Act in order to discharge dredged materials from a mountaintop coal mine into three steams and their tributaries. Initially, Mingo Logan obtained the necessary permit from the Army Corps of Engineers, which allowed it to discharge materials at the requested disposal sites. However, four years later, the EPA invoked its 404(c) authority and withdrew the permit (citing environmental concerns with the project). Subsequently, Mingo Logan filed a lawsuit challenging: (1) the broad nature of the term “whenever” under 404(c), and (2) the EPA’s authority to withdraw a permit after the Army Corps of Engineers has already issued a permit.

As to the first legal issue, the court found that Section 404(c) of the Clean Water Act imposes no temporal limit on the EPA’s authority to withdraw the Corps’ permit. The court determined that by using the expansive conjunction “whenever,” Congress made plain its intent to grant the EPA authority to prohibit/deny/restrict/withdraw a permit at any time. As a result, the court held that the unambiguous language of 404(c) manifests Congress’ intent to confer on the EPA a broad veto power extending beyond the permit issuance, which meant that the EPA was acting within its authority when it vetoed Mingo Logan’s permit.

As to the second legal issue, the court found that the EPA’s timing of the veto was outside the EPA’s Clean Water Act authority. After all, the EPA withdrew the permit four years after the Army Corps of Engineers had initially issued it. In reaching its decision, the court reasoned that awarding the EPA such broad authority would assert “a scenario involving the automatic self-destruction of a written permit … after years of study and consideration. Poof!” However, this legal victory was short lived, and the Court of Appeals reversed the district court’s decision. Since then, the Supreme Court has declined to hear Mingo Logan’s final appeal, which now means that Section 404(c) of the Clean Water Act expressly empowers the EPA to prohibit/deny/restrict/withdraw a discharge site permit “whenever” the EPA makes a determination that the statutory “unacceptable adverse effect” will result.

Setting a Precedent
Opponents of 404(c) argue that the EPA is setting a dangerous precedent for future projects by preemptively stopping mining projects before they enter the permitting process. To this end, the opponents are right. After all, the Mingo Logan decision supports a legal argument that the EPA may veto a site selection even after the Army Corps of Engineers issues a site permit. So, intuitively, what would prevent the EPA from preemptively stopping projects before they start?

That said, to say the EPA is setting a dangerous precedent is a bit dramatic. In fact, in its 42-year history, the EPA has only exercised its 404(c) authority thirteen (13) times, and only two of those determinations have been in last twenty years – one of which being the Mingo Logan decision. 
Considering the Army Corps of Engineers processes approximately 60,000 permits a year, the odds of the EPA flagging the average mining operation anytime soon are pretty slim. Statistical probability aside, however, the fact that the EPA rarely uses its 404(c) authority does not mean it will hesitate to use its authority in the future. Interestingly enough, this is the Pebble Project’s biggest fear.

Pebble Mine v. EPA
On May 22, 2014, the Pebble Limited Partnership (PLP) filed a lawsuit in district court seeking an injunction to stop the EPA from preemptively vetoing the Pebble Project under 404(c) of the Clean Water Act. Similar to the Mingo Logo complaint, Pebble is arguing that EPA’s actions exceed its authority under the Clean Water Act. In all likelihood, however, with the current case law and regulatory framework in place, the PLP’s injunction will not stop the EPA from invoking its authority under the 404(c).

As we have seen in the Mingo Logo decision, the EPA’s authority under the Clean Water Act has been well defined and well tested in US courts, and although there has been an occasional judgment overturned, none of these judgments have survived the appeal process. Indeed, the US Court of Appeals always arrives at the same conclusion: the EPA has broad discretional auditory under 404(c) to prohibit/deny/restrict/withdraw a permit that fails to address the EPA’s environmental concerns. Put another way, any legal attacks the PLP makes on the EPA’s authority under Section 404(c) of the Clean Water Act will not be successful.

Although the Mount Polley mine disaster has unleashed a torrent of congressional overreach arguments, the average Alaskan should not worry about the call to arms over the EPA’s alleged overreach of judicial power. The veto authority is there and has been for 42 years. Indeed, nothing short of an act of Congress is going to change this fact. For the Pebble Project, however, 404(c) might just be the final nail in the coffin.

Isaak Hurst is an attorney with the International Maritime Group, PLLC – a boutique law firm that provides legal services to the maritime, oil and gas, mining, and international business communities of the Pacific Northwest. He can be reached atIsaak.Hurst@InternationalMaritime.net.