Becker's Iowa Environmental Law Update : Iowa Environmental Lawyer & Attorney : Charles Becker : Belin McCormick P.C. Law Firm : IA Regulatory Compliance, Site Cleanups

On October 16, 2009, EPA drew a line in the sand regarding mountaintop mining. With regard to the Spruce No. 1 Service Mine Permit located in Logan County, West Virginia, EPA informed Arch Coal, Inc. that it was beginning the process that could result in the rescission of its Clean Water Act permit.  Although the mine had a validly-issued permit from the Corps of Engineers, EPA believes that it has broad authority to veto the Corps' issued permit if it finds that serious water quality damage may occur and that there are methods to avoid such damage.   In the words of William Early, the acting regional administrator for EPA in Region III:

We recognize the issued permit contains several provisions that may be intended to address water quality and mitigation based upon information and data available at the time [of the issuance of the Clean Water Act Section 404 permit]. However, in light of new data and information since permit issuance, EPA remains concerned with much of the analysis set forth in your letter, particularly as it relates to the potential for adverse water quality impacts, further avoidance and minimization measures, the potential for accumulative impacts, and identification and enforceability of success criteria for mitigation.

Mr. Early’s concern, as stated in the letter, is that the operation of the mine “may result in unacceptable adverse impacts to fish and wildlife resources.” He noted that the project allows for the construction of six valley fills for placement of excess spoil material generated through the surface coal mining activities and that there were only minimally acceptable methods to minimize impacts to aquatic resources. In EPA’s view, “there is the potential for [the mine’s] associated discharges to cause further stream degradation.” Early also noted that the existing permit fails to contain adequate measures to mitigate environmental damage and does not set out what procedure would be appropriate if water-quality impacts would happen to occur.

The action of EPA is notable in several respects:

• It is the first time that EPA has threatened to rescind a permit for a project that had been previously authorized.
• Since 1989, only one other project has received a Section 404(c) veto from EPA.
• Prior to 1989, a total of eleven projects have received a veto, none of which involved mining.

Additionally, it is interesting to note that EPA's review is purportedly based on "new data and information since permit issuance,"  a process that took almost ten years.  Some might wonder wherther it is new evidence or a new administration that is driving the review and, if it is the latter, what impact will it have on business to know that the fundamental rules of the game (such as revoking already issued permits) can be changed every four or eight years? 

Though environmentalists may look on the EPA action as an indicator that the EPA under Obama is going to be much more aggressive against mountaintop mining, perhaps this is not really the best test case for that proposition. This site was, after all, one of the very few sites that even the Bush-era EPA was reluctant to give a glowing review. In June of 2006, during the comment period for the permit for the Spruce Mine, the site received a ranking of “EC-2,” which equates to “Environmental Concerns and Insufficient Information.”  Further, in its statement, EPA "emphasizes that the Spruce No. 1 represents an unusual set of circumstances we do not expect to be repeated again."

While it is a significant first step, what action is taken by this EPA for the remaining seventy-eight mountaintop mining permits will be much more telling.

RELATED POST:  Switchback Regulation and Mountaintop Mining: The Wrong Path?
 

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Traveling up a mountain is never an easy proposition -- thin air, cold temperatures and those dizzying roads that whipsaw back and forth for miles.  While I recognize the need for switchback roads to convey the traffic, I have trouble using them as a model for environmental regulation, but it seems that that is where we are today; that is, changing environmental policy 180 degrees with each change of administration.  A case in point is Coeur Alaska, Inc. v. SEACC and EPA's recently announced initiative relating to mountaintop mining.

                                                 THE COEUR ALASKA CASE

The last time we saw  Coeur Alaska, the company had just won their case before the United States Supreme Court and could fill a lake with sludge from their mining operations. They were allowed to do so because a Bush-era EPA policy, as set forth in a director's memorandum, said that it was acceptable for the Corp of Engineers to issue the permit without applying the performance standards of the Clean Water Act to the fill material.  The Court deferred to EPA's interpretation because it was "not plainly erroneous or inconsistent with the regulation[s].”

Here we are, eighty-one days since the decision and all you can say is what a difference a few days make.

                                                MOUNTAINTOP MINING REVIEW
 

On September 11th, EPA declared that all seventy-nine pending permits for mountaintop removal mining would be sent back for additional review under the term of the Clean Water Act. EPA’s concern is that these operations would “likely cause water quality impacts.”

Lisa Jackson, the EPA Administrator, attempted to emphasis that this was an "enhanced coordination process" between EPA and the Army Corps of Engineers and that it was not a change in policy. With all due respect to Ms. Jackson, I think she misspoke. It isn’t a change in law, but it is certainly a change in policy. She said as much when she told the Tampa Bay Press: “The whole permitting process had become a bit toothless.” In a year’s time, this EPA will have every molar, bicuspid, canine and incisor back in place (the jury is still out on the wisdom teeth).

                                                             THE IMPACT

The problematic holding of the Coeur Alaska case isn’t only what Coeur Alaska won, but how it won it. The Supreme Court reaffirmed that EPA has great discretion in all things environmental. In that case, the holding worked to the advantage of the business.  However,  that ruling (and others) also gives EPA the ability to quickly reverse the environmental policies of the past eight years.  I agree that to the victor goes the spoils and that changes in many areas are appropriate.  My concern is that when there is another change in EPA (one of those few guarantees in life), the road will almost certainly take a hard turn, this time to the right.  And when the inevitable happens, it will turn back yet again.

In the end, maybe switchback regulation is as necessary as switchback roads.  But while both will get you where you want to go, they certainly expend a lot of energy, and costs, to get there.  So what's the alternative?  Maybe something more permanent, like a tunnel or legislation, is preferable.  Sure they both have up front costs, but at least you minimize the whipsaw effect (that is so hard on brakes and business planning).

RELATED POSTS:  The Supreme Court and the Environment: Who Did They Really Help?

                              COEUR ALASKA, INC. VS. SEACC: When Is A Lake Really a Landfill?

                              ENTERGY CORPORATION VS. RIVERKEEPER, INC.

                              Clean Water and Mountaintop Mining No Longer Mix

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Well, it has begun.

The posturing that one would expect before an important environmental conference like the United Nations Framework Convention on Climate Change in Copenhagen is in full swing.  To date, China and India have made it clear that they are not going to accept mandated targets to reduce greenhouse gas emissions.  Their arguments are:

• They are new to the industrial scene and they should have the same opportunity as the other industrialized nations (i.e. the United States) to pollute their way to prosperity;
• Their per capita emissions are, and will remain, well below those of the U.S.;
• Their "dirty" products are consumed primarily by industrialized nations so those nations should pay for the added costs of the emissions.

Politically speaking, these are pretty strong arguments.  The only real response is "Well, yes, but we're in a desperate situation and we need everybody to join in."  That response isn't very effective if you don't believe that global warming is in a "desperate situation" or, more importantly, you don't care. 

So what happens if China and India refuse to agree to any limits?  The practical impact is that if the industrialized nations agree to limits but China and India won't come along, then China and India will have the ability to sell their products cheaper than the U.S.  Jobs will shift  to those countries and imports of cheaper products will increase, while greenhouse gas emissions from China and India will presumably continue to increase. 

Since the U.S. has little power to push around the mountains that are China and India, we will need to look to what we can control -- tariffs on goods coming into the country (though the World Trade Organization could limit that control).  By adding tariffs to the products, we would discourage movement of jobs overseas and the importing of cheap products.  The tariffs could be adjusted as the country ramps up environmental compliance.  Once the country is in compliance with whatever environmental limits are agreed upon, we could eliminate the tariffs and all goods would be back on an even playing field.  Simple, right?  The only problem is that most countries get very upset when tariffs are imposed on their goods. 

China and India have been watching the Congressional climate change debates closely and saw the tariff issue coming.  They have been warning that tariffs are unacceptable.  Ten swing-vote Democrats are now posturing to require that the U.S. insist on full participation by all countries or the imposition of tariffs on the non-conforming countries.  If this is done, China and India may retaliate by imposing their own tariffs and we'll be off to the races.  Relatively smart people have come down on both sides of the issue.

So, like so many other things environmental, it comes down to money.  The new environmental question is likely to become, can we afford a trade war?  I don't have the answer but I remember the words of my father before our first camping trip (paraphrased slightly):  "If you are going to poke a bear with a stick, you'd better have a really good backup plan."  I told him, "I wouldn't poke the bear."  His reply, "That's a pretty good plan, got any others?"

RELATED POST: Environmental Legislation Won't Wait For China

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 Mediation of legal disputes (as opposed to time-consuming and expensive trials) has been a great benefit to the justice system. In mediation, the parties voluntarily meet with a neutral third party who listens to both sides and then splits the parties up. The mediator shuttles between the parties and tries to broker a deal to end the dispute. The success rate is remarkably high.

I’ve had the opportunity to participate in many mediations and I have found that sometime early in the process, after the parties have been split up, you’ll inevitably hear the following finger-pointing exchange between one party and the mediator:

Party 1 (with a slight pout): “They are really bad people. They’re doing bad things and they need to be the first one to make an offer.”

Mediator: “Ok, I’ll go talk to them.” 

The mediator goes to the other party and hears: 

Party 2 (with an air of indignation): “These people are the real villains. Their demands are outrageous. We can’t possibly make any offer. Tell them to make a reasonable proposal.”

Mediator: “Ok, let me talk to them.”

This goes back and forth until one party finally realizes that making the first move isn’t the end of the world, and an offer is made, and then countered, and on it goes until a resolution is reached. That first offer can take five minutes or five hours. It doesn’t matter too much to the mediator – he/she is being paid by the hour. And the mediator knows something the other two parties don’t; that is, sooner or later, someone will make the first offer.

When it comes to international climate change action, China (and India) and the United States are at the beginning of the mediation. Everyone is finger pointing:

U.S.: “China is beginning to be a huge contributor to CO2 emissions. They must commit to a huge reduction."

China: “The U.S. has historically generated much more CO2 than China and has done nothing over the last eight years. The U.S. needs to make the commitment to change, and then we’ll see what we’ll do.”

U.S.: “We’re not going to pass climate change legislation until China does."

China: “ We won’t move.”

Let me shorten this mediation by about four hours by making a suggestion – United States, pass your legislation. Be the first to make the offer. Keep the pressure on China (consider trade policy, for example), but take the lead.  You're just wasting a lot of effort if you insist that China take action at the same time. 

Further, though it certainly has significant environmental problems, it isn’t as though China is just sitting on its 2.6 billion hands. Pop quiz: As between the U.S. and China, which country:

• Committed to reduce the energy intensity of its economy – energy used per dollar of goods produced – by 20% in five years?
• Will increase its total installed capacity for solar power 75 times in just over ten years?
• Plans to install 100 million energy-efficient light bulbs in 2009?
• Has committed $462 billion to scaling up renewable energy by 2020?
• Has increased wind power by 100% in each of the last four years?
• Is the world’s top producer of solar photovoltaic panels?
• Has the more stringent automotive fuel economy standards?
• Invested $12 billion in renewable energy in 2009, placing it second in the world in absolute dollars spent, just behind Germany?
• In 2009 will be the largest installer of wind power.

The correct answer to each question is China. I’ve graded the quiz. The West Coast did well and the Midwest was great but you people on the East Coast, particularly the D.C. area, failed miserably.

My point is that if the U.S. goes first, it won’t be the end of the world. (I won’t pull an Al Gore and say that if we don’t go first, it will be the end of the world. I wouldn’t do that.) Whether its cap and trade, nuclear, or something more creative, legislation is going to happen.  I'm not saying that that is good or bad, just that the genie is out of that bottle.  Insisting that China must act benefits no one – unless you’re being paid by the hour.

RELATED POST:  Tariffs and the Environment: Are We Ready For a Trade War?

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Three months ago I said that cost-benefit analysis was at the heart of the environmental debate between Republicans and Democrats. Two months ago I said that the United States Supreme Court granting unfettered discretion to EPA to define the applicability and scope of cost-benefit analysis was an extraordinary gift to our new EPA administrator. Three days ago I said that we could expect this administration to make wholesale revisions to the administrative rules and guidelines governing regulation of the environment.

So what happens?  EPA begins to modify the guidelines it uses to undertake cost-benefit analysis when analyzing environmental regulations. The best description I’ve seen is by Michael Livermore. He writes:

The Guidelines [for Preparing Economic Analysis] is little known outside of EPA, but used regularly by the agency to design every major environmental regulation. Before any rule is adopted, it must go through an economic analysis according to the Guidelines . . . .

The draft changes to the Guidelines are under discussion now and will hopefully be adopted this fall. These revisions would create a major shift in the status quo at EPA.

I have to agree with Michael when he says it will create a major shift in the status quo. He argues that that shift will be a good thing for environmental regulation. While I don’t agree with this conclusion, I do think it is very interesting, and telling, that this EPA is acting so quickly to change even the most fundamental rules governing environmental regulation.

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I have read, with interest, several posts that describe the most recently concluded United States Supreme Court term as being a miserable year   for environmental interests. The authors point out that of the five cases addressing the environment, all of them resulted in reversals of decisions that had favored environmentalists. Based on this scorecard, the posts are quick to label the majority of members of this Supreme Court as being hostile to the environment and pro-business. Glenn Sugameli, an attorney with the environmental group Earth Justice, went so far as to say that he believes that the Court put on “pro-business blinders.”
 

While the outcome of the cases certainly did not advance environmental interests, I find it difficult to refer to the outcomes as pro-business. In fact, in three of the cases, the Court deprived the business community of what it needs most.
 

Businesses necessarily rely upon predictability. They need to know, to the greatest extent possible, that the rules of the game are not going to constantly shift. They need to know that government will not make major changes in the regulatory scheme and that they can plan future  purchases, hiring, markets, expansion and the like on rules that are not subject to daily variation. This is critical in the area of environmental regulation where a change in the rules can shift millions of dollars in costs. Business owners understand that there will always be some changes, but they expect it to occur through a cumbersome and combative process (a/k/a Congress). In short, they hope for some level of stability. By this measure, the Supreme Court did not do business a favor during this term.
 

In my previous post relating to Entergy Corp. v. Riverkeeper, Inc., I noted that the end result was that the Court has now accorded broad deference to EPA to determine when and where the agency will employ the use of a cost-benefit analysis. In a similar vein, I noted that in the Coeur Alaska, Inc. v. SEACC case, the Court deferred to EPA’s interpretation as found in an unpublished memorandum authored by the Director of EPA’s Office of Wetlands, Oceans and Watersheds.  In both of these cases, the Supreme Court was making it clear that EPA can change the rules as it sees fit and without public comment.  In several articles written about the Coeur Alaska case, the comment was made that, although the environmentalists lost that case, there would be an easy fix by asking the present administration to take action (presumably without the need for public comment) to repeal the interpretation of the rule that allowed the Supreme Court to rule in favor of Coeur Alaska.  

In Winter v. NRDC, Inc., the Court ruled that the needs and prior practices of the Department of the Navy should receive deference. As in Entergy and Coeur Alaska, this case resulted in substantially strengthening the hand of the governmental entity.
 

Though it is an admittedly small sample, I believe that the best way to label this Court is pro-government when it comes to environmental questions. Given the complexities of environmental regulation, I can’t say that I’m surprised at the rulings which, in effect, simply defer to the expertise of the agency.  What does surprise me is that the Roberts Supreme Court believes that making federal agencies more powerful and less accountable is a good result.
 

Moreover, the impact on many types of businesses is likely going to be significant in light of the political climate. It is an understatement to say that the Obama  administration’s view of environmental regulation is significantly different  from the view held by the Bush administration. With this Court’s seal of approval, changes in EPA regulations, guidance documents and unpublished memos are going to come fast and furious. If anyone really believes that it is “pro-business” for the Supreme Court to tell EPA that it has discretion to change the rules whenever it desires and without notice or public comment, I would question their definition.
 

I believe I can safely guarantee that a change in the presidency, like death and taxes, is a certainty at some time in the future. When that happens, the rules will change yet again. And for business, the lack of certainty, or at least relative stability, is anything but “pro-business.”
 

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In its final environmental ruling for this term, the United States Supreme Court went up against the fishes.  The fishes lost.

In Coeur Alaska, Inc. v. Southeast Alaska Conservation Council, the plaintiff mining company sought to pipe a slurry of 210,000 gallons of process wastewater and 1,440 tons of tailings each day to the bottom of Lower Slate Lake. The parties to the litigation agreed that the activities would fill the lake with solids and destroy all aquatic life. Upon conclusion of the mining operations, Coeur Alaska proposed to cap the tailings with four inches of native material and restore and expand the lake.

Since the lake was a water of the United States, Coeur Alaska needed a permit to discharge the slurry. The difficulty here was that the Clean Water Act provides for two distinct methods of getting a discharge permit. Under Section 404 of the Act, the Corp of Engineers can issue permits for discharge of “fill material," with EPA having the right to veto. Fill material is defined to be any material "that has the effect of . . . [c]hanging the bottom elevation of water."  For discharges of anything other than fill, Section 402 of the CWA requires EPA to issue permits pursuant to the effluent limitations of the Act. 

As one might imagine, EPA and the Corps occasionally disagree on who has jurisdiction, and such was the case with mining tailings.  In 2002, the Corps and EPA promulgated a regulation that defined fill material to include “tailing or similar mining-related materials.”  Still, the regulation failed to identify whether the fill material, that was subject to the Corps jurisdiction, needed to meet performance standards.

In a 2004 internal memorandum written by Diana Regas, the Director of EPA’s Office of Wetlands, Oceans and Watersheds during the Bush administration, Ms. Regas declared that EPA’s performance standards did not apply to discharges of fill material.

Based on this information, Coeur Alaska sought a discharge permit from the Corps of Engineers rather than EPA. The Corps determined that any environmental damage would be temporary and issued the permit. SEACC challenged the Corps decision and won at the 9th Circuit, but lost before the Supreme Court.

In a 6-3 decision, the High Court held that the terms of the CWA were ambiguous. The Court said:

Because Congress has not “directly spoken” to the “precise question” of whether an EPA performance standard applies to discharges of fill material, the statute alone does not resolve the case.

Since the statute did not provide the answer, the Court attempted to determine congressional intent.  However, they found another road block in that there was no such indicia.  Next, the Court looked to agency regulation, but found it to be ambiguous. Stepping down one more rung, the Court looked to the subsequent interpretation of the regulation by EPA and found Ms. Regas' internal EPA memo that the performance standards do not apply to fill material.  The Court declared that the memo did not satisfy the Court's previous ruling in Chevron v. NRDC on what can be accorded deference by a court, but went on to say: 

The Memorandum presents a reasonable interpretation of the regulatory regime. We defer to the interpretation because it is not “plainly erroneous or inconsistent with the regulation[s].”

With that, the Supreme Court reversed the 9th Circuit and allowed Lower Slate Lake (presumably to be renamed Much Higher Slate Lake in the near future) to be filled with the slurry.

It must be said that this Court searches very hard for guidance. On the central question of whether performance standards apply to discharges of fill material, they found that:

• The statute had not “directly spoken” to the “precise question;”
• There was no indicia of Congressional intent;
• Agency regulations were ambiguous; and
• One internal agency memo, that had not been subject to public comment and which did not meet the Court’s previous cases to merit deference, was sufficient to justify the discharge.

That is one heck of a memo. For all those low level staffers and department heads who think that no one reads anything that they put in their reports, Ms. Regas would beg to differ. Those memos can have some real clout.

I would note that the oral arguments, as well as references in the opinion, indicated that several members of the Court were consoled by the fact that EPA had veto power and it did not exercise it in this case. If EPA didn’t see the need to veto it, why should the Court?  I suppose there are any number of ways to answer that question. Suffice it to say that a majority of this Supreme Court, reviewing a Bush-era EPA decision, felt that the answer was that it shouldn’t.
 

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