I. INTRODUCTION
The U.S. Army Corps of Engineers' ("Corps") entire regulatory program, including permitting, as it relates to the mineral industry, has undergone some significant changes during the past several years. Most significantly, the very future of the nationwide permit as part of the Corps permitting process for coal mining (and very possibly many other industries) has been brought into serious question as a result of a federal court decision on July 8, 2004 in West Virginia, Ohio Valley Environmental Coalition, et al. v. Bulen, Civil Action No. 3:03-2281, which will be discussed in this outline. The rulings in this case, and the pending appeal, are the most significant developments involving §404 of the Clean Water Act as it pertains to the coal industry in many years. But it is by no means the only important development as will be noted in this outline. Major regulatory developments, both in the past and in the future, will continue to shape the universe of §404 permitting in the area of mining, especially contour and mountaintop removal coal mining in the Eastern United States.
II. BACKGROUND
Origins of the Mountaintop Mining Controversy
A. Bragg v. West Virginia Coal Association
In 1998, a group of individual citizens and the West Virginia Highlands Conservancy sued the West Virginia Division of Environmental Protection ("WVDEP") and the Army Corps of Engineers ("Corps"), alleging that the Corps lacked the requisite authority under the Clean Water Act ("CWA") to approve discharges of excess spoil into waters of the United States. Plaintiffs asserted that the Corps' authority under § 404 of the CWA is limited to discharges of "fill material" and that excess spoil is waste and not fill material. Plaintiffs alternatively argued that even if the Corps had the legal authority to approve discharges of excess spoil, it was improper for the Corps to use its nationwide permit program to do so.
The Plaintiffs settled with the Corps in 1998, agreeing that the Plaintiffs would cease to argue that excess spoil is "waste," while the Corps in turn agreed to participate in a programmatic environmental impact statement ("EIS") relating to the impact of mountaintop removal mining and the use of valley fills. The Corps further agreed that pending completion of the EIS, it would limit the use of nationwide permits for excess spoil fills in the Corps' Huntington, West Virginia District to areas of upstream drainage of 250 acres or less. Larger fills would require an individual Corps permit.
The Plaintiffs pursued their litigation against WVDEP, alleging that the state had failed to discharge a number of its duties relating to mountaintop removal mining that were imposed on its state program when it was approved by OSM. Specifically, the Plaintiffs asserted that the so-called stream buffer zone rule prohibits the placement of excess spoil valley fills in intermittent or perennial streams. The Court ruled that the OSM and West Virginia stream buffer zone rules were inconsistent with the practice of allowing valley fills to cover steams. The Court also observed that inasmuch as § 404 permits allow dredge and fill operations in waters of the United States, such practice is illegal. The Court rejected the argument that the CWA § 404(b)(1) guidelines could be substituted for the buffer zone findings. Hence the Court granted summary judgment on Plaintiffs' claim that valley fills could not comply with buffer zone variance finding requirements.
The Fourth Circuit reversed the District Court's jurisdictional finding, concluding that the state had immunity under the Eleven Amendment from action in federal court. Bragg v. West Virginia Coal Association, 248 F.3d 275 (4th Cir. 2001). The Court concluded that the state had not waived its immunity by obtaining federal approval of its state program and that the state program was state, and not federal law. The Court did not address the merits of the stream buffer zone issues.
B. Kentuckians for the Commonwealth, Inc. v. Rivenburgh, No. 2:01-0770 (S.D. W.Va. 2001).
On August 21, 2001, Kentuckians for the Commonwealth ("KFTC") sued the Corps to challenge one particular nationwide permit that had been approved for valley fills. The Plaintiffs' claims against the Corps were virtually identical to those asserted in the Bragg case. On May 8, 2002, Judge Hayden issued his opinion holding (1) that Congress never intended fills authorized under the CWA to be permitted solely to dispose of waste; (2) during the past 20 years, the Corps (especially the Huntington District) had issued § 404 permits for mountaintop removal fills that were used solely to dispose of waste material and that these permits were illegal. The Court further ruled that the EPA/Corps final rule redefining "fill material" was a flawed effort to attempt to legalize an illegal practice by the Corps, namely to issue § 404 permits for fills. The opinion enjoined the Corps from issuing any § 404 permits which authorize the placement of fill material into waters of the United States. On June 17, 2002 Judge Hayden clarified his earlier decision and denied a stay request by defendants. The court's clarification limited the decision's reach to the Huntington District of the Corps. The Court further clarified its ruling by stating: (1) the injunction applied to all types of § 404 permitting activities "where waste disposal without a primary constructive purpose" is occurring. Thus the decision also impacted refuse impoundments, fills from standard contour/strip surface mines or any other types of mining-related fills.
On appeal, the Fourth Circuit rejected the lower Court's ruling and held (1) that the Corps had properly interpreted the CWA as authorizing the Corps to issue permits for the creation of valley fills in connection with coal mining activities, even when the valley fills served no purpose other than to dispose of excess overburden from the mining activity; (2) that regardless of whether the fill has a beneficial primary purpose, SMCRA does not prohibit the discharge of surface coal mining excess spoil into waters of the United States; (3) that the Corps' 1977 regulation defining "fill material" was rationally interpreted by the Corps as allowing issuance of permits for valley fills with overburden from surface coal mining, and such interpretation was neither erroneous nor inconsistent with the regulation, 317 F.3d 425 (4th Cir.).
C. Draft Environmental Impact Statement Dealing with Mountaintop Removal
On June 6, 2003, the Corps, EPA, OSM, the U.S. Fish and Wildlife service and state agencies in the Appalachian region issued a draft programmatic environmental impact statement for dealing with mountaintop removal mining waste. The draft EIS was an outgrowth of the settlement in the Bragg litigation but is yet to be finalized. The draft addressed four alternatives for dealing with mountaintop mining waste, with a preferred option that would integrate actions under the Surface Mining Control and Reclamation Act ("SMCRA") with the CWA to determine the placement of valley fills "while maintaining independent decision-making authority among the agencies." Under the draft preferred alternative, the Corps would first determine whether a mining project would be covered under a nationwide 21 permit ("NWP 21") or under an individual permit that requires a more rigorous review. The Corps would also have to make a site-specific evaluation of the impacts to accommodate regional conditions on permits applied by the specific Corps district offices. For example, in West Virginia, mining projects that affect at least 250 acres require an individual permit.
The preferred alternative in the draft EIS would also direct OSM to issue a final rule to make restrictions regarding stream buffer zones consistent with the Clean Water Act and SMCRA.
D. OSM Proposed Rule on Stream Buffer Zones.
On January 7, 2004, OSM promulgated a proposed rule to amend its regulations relating to stream buffer zones (69 Fed. Reg. 1036, 1-7-04). This proposed rule attempted to clarify the circumstances in which mining activities, such as the construction of excess spoil fills, may be allowed within the stream buffer zone ("SBZ"), i.e., within 100 feet of a perennial or intermittent stream. The proposed rule attempt to define the requirements for coal operations to demonstrate to the regulatory authority that, to the extent possible, the volume of excess spoil is minimized and that spoil fills are designed to be no longer than needed to accommodate the anticipated volume of spoil from the mine.
This rule has not, as yet, been finalized.
III. Ohio Valley Environmental Coalition v. BULEN, S.D. W. Va., No. 3:03-2281 (2004).
On July 8, 2004 the U.S. District Court for the Southern District of West Virginia found that NWP 21, issued by the Corps, violates the CWA because it requires a case-by-case determination of whether "valley fills" have more than a minimal environmental impact only after the spoil has been disposed of. The NWP 21 allows mining operators to undertake projects to mitigate the impact of their activities on streams.
This suit was brought by Ohio Valley Environmental Coalition, the Natural Resources Defense Counsel, and the Trial Lawyers for Public Justice against the Corps in the Southern District of West Virginia over the use of NWP 21 to authorize valley fills for the disposal of mining waste.
The district court found that NWP 21 does not comply with either the language or the legislature history of the CWA. Specifically, the court noted that §404(e) of the CWA authorizes the Corps to issue nationwide permits only for those activities determined before issuance to have minimal environmental impact. The court found that NWP 21 requires a case-by-case, post-hoc determination of minimal environmental impact, which the court found runs afoul of that section.
In analyzing Congress' intent in enacting §404(e) of the CWA authorizing the use of nationwide permits, the court pointed to language in the legislature history which required the Corps to define categories of discharge activities that do not require permittees or the Corps to undergo the extensive individual permit review process since such activities, by their very nature, "will cause only minimal adverse environmental effects. . . ." (CWA §404(e))
The court also noted that NWP 21 does not afford plaintiffs an opportunity (i) to participate in the consideration of the specific discharge; (ii) to object to proposals to discharge; or (iii) to administratively appeal NWP 21 authorizations. The court said Congress' intent in enacting NWP 21 was to empower the Corps to identify activities with only minimal impacts on the environment and to allow public notice and comment before issuing a nationwide permit.
The court additionally noted that the fundamental problem with the Corps' approach is that NWP 21 defines a procedure instead of permitting a category of activities. Thus, the court felt that the issuance of a nationwide permit thus functions as a guarantee ab initio that every instance of the permitted activity will meet the minimal impact standard, and that by combining features of both individual and general permitting in NWP 21, the Corps allows an activity with the potential to have significant effects on the environment without being subject to public notice and comment or other procedural hurtles to authorization pursuant to §404(a) of the CWA.
The Court ordered the Corps to suspend those authorizations for valley fills and surface impoundments on which "construction has not commenced" as of July 8, 2004. On August 13, the court supplemented its earlier opinion in response to plaintiffs' request to supplement their complaint to enjoin six more NWP 21 authorizations by extending the scope of the existing injunction to all NWP 21 authorizations issued since 2002 that had not "commenced construction" as of July 8, 2004.
On August 31, 2004, Judge Goodwin denied industry's motion for reconsideration and denied plaintiffs' motion to clarify the meaning of "commencement of construction." Plaintiffs wanted the Court to clarify that this exception did not include pond construction and grubbing, but was limited to actually placing spoil into a fill. The Court declined to clarify or to provide further guidance, saying that "construction" had either started or not and that the Corps was capable of interpreting and applying that standard.
After many "fits and starts," the United States decided to appeal and has done so, as have the intervener defendants.
Post-Bulen Guidance from the Corps
On July 14, 2004 the Corps' Huntington, West Virginia District issued a public notice intended as guidance in light of the July 8, 2004 District Court ruling in Bulen. The so-called guidance dealt solely with the mechanics for filing individual permits ("IPs"), and did not attempt to define or identify how the Corps would interpret "under construction" in connection with NWP 21 authorizations already issued. The Huntington District has separately announced that obtaining IPs should not be more protracted than obtaining authorization under NWP 21. This seems somewhat hard to fathom, given the complexities of the IP process, including the detailed §404(b)(1) guidelines, the extensive public participation process, the requirement to perform a detailed alternatives analysis and the NEPA process.
Impact on Other Clean Water Act Programs
Not only is the fate of NWP 21 in serious jeopardy, but the Bulen decision, if affirmed on appeal and if followed by other courts, may expose over 20 other Corps nationwide permits to similar challenges, including those relating to farming, hydropower projects, waste cleanups and many other activities. Like NWP 21, many other Corps nationwide permits currently allow the Corps to review projects authorized under the generic permit conditions individually and determine whether environmental mitigation is needed to ensure no more than minimal environmental effects occur.
Additional Factors and Questions Post-Bulen Decision
- While the Bulen case has no immediate impact outside the Southern District of West Virginia, the following scenarios are possible:
- There is a much greater likelihood of similar legal challenges to NWP 21 in other districts in other states, such as the Eastern District of Kentucky.
- If the Fourth Circuit affirms Bulen, its likely that the Corps may significantly revise or even eliminate NWP 21. One possibility is that NWP 21 could be revised to cover only minor aspects of mining and leaving fills and impoundments to the IP process. The Corps has discussed doing an "interim final rule" affecting its nationwide program after the election.
- The decision will likely cause the Corps offices with jurisdiction outside West Virginia to push mining companies away from NWP 21 and toward IPs, especially where fills and impoundments are involved.
- The Corps may be without adequate staffing and other resources available to address the workload requirements inherent in the IP process.
- Lead District Concept. The Corps announced by memorandum on August 30, 2004 that it agrees that the agency should identify a lead district for each state while continuing to evaluate the realignment of regulatory program boundaries along state lines. This concept will be utilized to provide "stewardship" roles to increase consistency and "streamlining" measures on regulatory programs, including permitting.
- Will Kentucky Assume Primary of the CWA §404 Program? Kentucky regulatory officials, including Secretary LaJuana Wilcher of the Environmental and Public Protection Cabinet, are said to strongly favor assuming control or primacy over the CWA §404 program in Kentucky. Whether the Corps would ultimately support such a move and, if so, whether Kentucky could effectively absorb such a major program given the budgetary and staffing ramifications, is unknown. However, such a development could significantly impact the mining industry's permitting and regulatory process.
- Industry's Efforts to Explore Using SMCRA as a Platform for §404 CWA Permits. The mining industry has undertaken an evaluation of the feasability of using the SMCRA permitting process as a platform for issuance of §404 CWA permits. While there are many similarities in the two permit application processes, there are clearly many differences. Trying to integrate the information and analytical requirements of both programs may prove to be very difficult, perhaps impossible without legislative change. This is especially time if one is applying for an IP since these entail compliance with the §404(b)(1) guidelines and with NEPA.