By Cori M. Badgley

As mining companies continue attempting to lay claim to gold in the state known as “the last frontier,” environmental groups continue in their efforts stop them. At issue in Coeur Alaska, Inc. v. Southeast Alaska Conservation Council (2009) 129 S. Ct. 2458 was the proposed disposal of “slurry” from the Kensington Gold Mine into Lower Slate Lake. The United States Army Corps of Engineers (“USACE”) issued a 404 permit for the “fill” of the lake, which was challenged by the Southeast Alaska Conservation Council (“SEACC”), among others, on the grounds that the new source performance standards found in Section 306 of the Clean Water Act (33 U.S.C. § 1251 et seq.) (“CWA”) prohibited the discharge of the slurry.

The underlying project involved Coeur Alaska, Inc.’s proposal to reopen the Kensington Gold Mine, which is located approximately 45 miles north of Juneau, Alaska. The mining technique used by Coeur is known as “froth flotation.” This technique results in a mix of crushed rock and water called “slurry” that needs to be disposed of somewhere. Instead of creating a tailings pond, which is the standard way to dispose of the slurry, Coeur planned to dispose of the slurry into Lower Slate Lake. Coeur planned to dam the lake, creating an isolated disposal area. For the disposal of the slurry into the lake, USACE issued a 404 permit.[1]

SEACC challenged the 404 permit issued by USACE allowing the disposal of the slurry into the lake. Specifically, SEACC argued that the discharge of slurry was governed by Section 402, not Section 404, like the discharge from the lake into the stream, and therefore, the EPA, and not USACE, had to issue a 402 permit. Alternatively, even if Section 404 applied, USACE was required to apply the new source performance standards in Section 306, which prohibited any discharge of slurry. The Ninth Circuit Court of Appeals agreed with SEACC, and Coeur petitioned for and was granted review by the United States Supreme Court.

Overturning the decision of the Ninth Circuit Court of Appeals, the Supreme Court disagreed with all of SEACC’s arguments. The Supreme Court framed the issues in this manner: “whether the [CWA] gives authority to [USACE], or instead to the [EPA], to issue a permit for the discharge of … slurry” and “whether, when [USACE] issued that permit, the agency acted in accordance with law.”

As to the first issue of what permit was required, the Court found that both the statute and the regulations forbid the “EPA from exercising permitting authority that is provided to” USACE pursuant to Section 404. Thus, the Court reasoned that if USACE has authority to regulate the slurry discharge, then the EPA does not have any authority over the discharge. Here, all parties conceded that slurry meets the definition of “fill” under Section 404. SEACC argued that Section 404 “does not authorize [USACE] to permit a discharge of fill material if that material is subject to an EPA new source performance standard.” The Court disagreed, finding that SEACC’s interpretation would lead to a convoluted process. The Court found that the statute and the regulations supported the much simpler question of “is the substance to be discharged fill material or not?” The answer to that question would determine whether USACE or EPA had jurisdiction over the discharge. Therefore, the Court held that USACE was the proper agency in this case to grant the permit.

The second issue presented the Court with an interpretation problem. Both the statute and the regulations were silent on whether the new source performance standards had to be applied by USACE when issuing a 404 permit. Thus, the Court looked to an internal memorandum of the EPA interpreting Section 306’s applicability to Section 404 and whether that interpretation was reasonable. The memorandum reasoned that “because the discharge does not require an EPA permit …, the EPA’s performance standard does not apply to the discharge.” The memorandum made two important points on the limitations of this statement: 1) this applies in cases where the discharge occurs in a closed body of water, and 2) “when a discharge has only an ‘incidental filling effect,’ the EPA’s performance standard continues to govern that discharge.” Because this interpretation was reasonable and not clearly erroneous, the Court deferred to the EPA’s interpretation and held that USACE properly issued the 404 permit.

Although the court had addressed all of the applicable issues in this case, the Court went on to address one more question: “whether the CWA contemplated that both agencies would issue a permit for a discharge.” The Court found that “a two-permit regime is contrary to the statute and the regulations.” Therefore, a discharge of fill material requires a 404 permit only, not an NPDES permit.

This will likely be viewed as a big win for mining operations across the nation and may have far reaching implications for all 404 applicants across the board. It appears that the important inquiry for discharges will be: does the discharge meet the definition of “fill” under Section 404? If it does, Section 404 applies. In terms of the concerns over water quality, it must be remembered that state water quality standards must still be met under Section 401, and any discharge from the body of water where the slurry is disposed of must comply with Section 402 and the performance standards, as occurred in this case.

Cori M. Badgley is an associate at Abbott & Kindermann, LLP.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

[1] In addition to the 404 permit, Coeur obtained a 402 or National Pollutant Discharge Elimination System (“NPDES”) permit from the Environmental Protection Agency (“EPA”) for a separate discharge from the lake into a nearby stream. Prior to entering the stream, the water must be cleaned through a purification system meeting strict standards under the NPDES program.