Supreme Court Holds that Mine Tailings May Be Regulated as “Fill Material” under the Clean Water Act

Overview

On Monday the Supreme Court, in Coeur Alaska, Inc. v. Southeast Alaska Conservation Council et al., reversed a decision of the Ninth Circuit that had invalidated a permit issued by the Army Corps of Engineers (Corps) for the discharge of mine slurry from an Alaska gold mine into a lake located three miles from the mine site. 

Justice Kennedy penned the opinion on behalf of a majority of six justices holding that the Corps, not the Environmental Protection Agency (EPA), had the authority to permit Coeur Alaska’s discharge of mine slurry as “fill material”, and that the Corps acted in accordance with the Clean Water Act (CWA) in issuing the permit.

The decision carries significant implications for mines seeking permits under the CWA for the discharge of mine tailings, and could have implications as well for other categories of point sources regulated under the CWA.  The decision could induce the Administration, or Congress, to revise current rules for the discharge of mine tailings.

Case Background

In Coeur Alaska, environmental groups, led by the Southeast Alaska Conservation Council (SEACC), challenged a discharge permit issued to Coeur Alaska by the Corps under section 404 of the CWA.  The permit would allow Coeur Alaska to discharge a mixture of crushed rock and water, or slurry, produced from a gold extraction technique known as “froth flotation” into a naturally occurring lake.  Coeur Alaska proposes to discharge the slurry into the lake, raising the level of the lake bed and the size of the lake, and then to discharge purified lake water into a downstream creek.

SEACC sued the Corps over issuance of the section 404 permit, arguing that (1) Coeur Alaska should have sought a CWA section 402 permit for the discharge of slurry into the lake, just as it was required to do for the discharge of lake water into the stream below; and (2) the slurry discharge would violate “new source performance standards” promulgated by the EPA under CWA section 306, which forbid froth-floatation gold mines from discharging “process wastewater,” which includes solid wastes.

A 402 PERMIT WAS NOT REQUIRED FOR THE DISCHARGE OF “FILL MATERIAL”

Justice Kennedy first addressed the apparent conflict between the Corps’s permitting authority under section 404 of the CWA and the EPA’s permitting authority under section 402 of the CWA, holding that the Corps, not the EPA, had the authority to permit the discharge of mine slurry into the lake.

The CWA classifies crushed rock as a “pollutant,” and forbids its discharge except as in compliance with the CWA.  Section 402 of the CWA gives the EPA authority to issue permits for the discharge of any pollutant, with one important exception; section 404 empowers the Corps to issue permits “for the discharge of . . . fill material.”  The CWA authorizes the EPA to “issue a permit for the discharge of any pollutant,” “[e]xcept as provided in [section 404].”  A principal issue before the Court, therefore, was the decision by the agencies that Coeur Alaska’s slurry constitutes “fill material.”

Regulations issued jointly by the Corps and the EPA define “fill material” as any “material [that] has the effect of . . . [c]hanging the bottom elevation” of water, including “slurry . . . or similar mining-related materials.”  The Ninth Circuit’s opinion, issued in 2007, confirmed that Coeur Alaska’s slurry meets the Corps’ regulatory definition of “fill material.”  Justice Kennedy opined that the agencies’ regulations establish “a defined, and workable, line for determining whether the Corps or the EPA has the permit authority.”  The Corps of Engineers, the opinion concludes, “has authority to permit Coeur Alaska’s discharge of the slurry.”

THE CORPS’S SECTION 404 DISCHARGE PERMIT DID NOT VIOLATE EPA’S “NEW SOURCE PERFORMANCE” DISCHARGE STANDARDS FOR GOLD MINES

Environmental groups also argued that the section 404 permit, issued on the basis of the Corps’s decision that Coeur Alaska’s slurry is fill material, was not issued “in accordance with law.”  Specifically, SEACC and others contended that permitting Coeur Alaska to discharge the mine slurry would violate “new source performance standards” promulgated by the EPA under the CWA, which forbid froth-flotation gold mines to discharge “process wastewater,” which includes solid wastes. 

Justice Kennedy acknowledged that the CWA is ambiguous on the question of whether section 306, which governs new source performance standards, applies to discharges of fill material regulated under section 404.  On the one hand, section 306 provides that a discharge that violates an EPA new source performance standard is “unlawful”—without an exception for fill material.  On the other hand, section 404 grants the Corps blanket authority to permit the discharge of fill material—without mentioning section 306.   Moreover, Monday’s opinion found that Congress, in drafting the CWA, did not speak to the “precise question” at issue, and that the agencies’ regulations construing the CWA, which normally would be entitled to deference under Chevron USA v. NRDC, also fail to fully resolve the statutory ambiguity. 

The Court’s resolution of the jurisdictional issue ultimately turned not on the language of the CWA or regulations issued by the Corps and the EPA, but rather on the agencies’ subsequent interpretation of regulations promulgated under the CWA.  Focusing on agency statements “of practice and policy”, Justice Kennedy’s opinion relies heavily on an internal EPA document dubbed the “Regas Memorandum,” which explains that the EPA’s new source performance standards apply only to the discharge of water from the lake into the downstream creek, and not to the initial discharge of slurry into the lake.  To read EPA’s 2004 Regas Memorandum, click here.

Noting that agency memoranda are “not subject to sufficiently formal procedures to merit full Chevron deference”, the Court nevertheless determined that the EPA’s Regas Memorandum provided guidance on the scope of the agencies’ regulations, and that the memo’s findings were not “plainly erroneous or inconsistent with the regulation[s].”  The Court ultimately found that that the Corps did not violate EPA’s new source performance standard for gold mines.

Justice Ginsburg, dissenting, insisted that the opinion could result in “[w]hole categories of regulated industries” gaining immunity from pollution control standards simply by adding “solid matter” to a pollutant “to raise the bottom of a water body,” thereby turning a “pollutant” governed by CWA section 306 into “fill” governed by section 404.  Justice Breyer found this danger overstated, pointing out that that EPA has never suggested that it would interpret the regulations so as to turn section 404 into a loophole, that EPA retains the ability under section 404(c) of the CWA to veto any section 404 plan that it finds has an “unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas . . . , wildlife, or recreational areas,” and that any decision by EPA not to apply section 306 of the CWA must be a reasonable one, subject to judicial review.

Implications For The Mining Industry And Other Industries

The Coeur Alaska decision carries significant implications for mines seeking permits under the CWA for the discharge of tailings, and could have implications as well for other categories of point sources regulated under the CWA, ranging from the manufacturing of cement to the mining of coal and other mineral resources.

Following the decision, environmental groups called on the Obama Administration to reverse the decision by regulation.  Congress might also address the regulation of mine tailings by amending the CWA.  Representatives Frank Pallone (D-NJ) and Dave Reichert (R-WA) have introduced legislation, the Clean Water Protection Act, H.R. 1310, that would, if passed, have the effect of reversing the Coeur Alaska decision.