U.S. Supreme Court to Consider Whether Discharges of Fill Material Must Comply with EPA Effluent Limitations

July 2, 2008

On June 27, 2008, the U.S. Supreme Court granted certiorari in Coeur Alaska, Inc. v. Southeast Alaska Conservation Council. In Coeur Alaska, the Court will decide whether discharges of fill material, which for 35 years have been regulated by the U.S. Army Corps of Engineers under Section 404 of the Clean Water Act, must now comply with effluent regulations promulgated by the U.S. Environmental Protection Agency.

After years of extensive environmental analysis concerning its proposed plan of operations, Coeur Alaska, a mining company, obtained a Section 404 permit from the Corps of Engineers. The permit authorized Coeur Alaska to discharge tailings from its gold mining operations into a lake in southeastern Alaska as fill material. In granting the permit, the Corps relied on regulations in which it and EPA jointly defined the statutory term “discharge of fill material” to include “tailings or similar mining-related materials.” Furthermore, EPA approved of the discharge by deciding not to exercise its authority under Section 404 to veto the permit. Several environmental organizations, including the Sierra Club, nonetheless challenged the permit, arguing that the mostly solid tailings slurry violated the Clean Water Act because the discharge did not comply with a zero-discharge effluent limit that EPA had adopted for the particular process used at the gold mine.

The district court upheld the permit, recognizing that the Clean Water Act “divides the permitting process into two segments” (one for discharges of fill material under Section 404 and another for discharges of other pollutants under Section 402) and that effluent limitations were therefore inapplicable under Section 404. The district court also rejected the plaintiffs’ argument that the agencies’ interpretation of their own regulations–an interpretation that “facially falls within the definition of ‘fill material’ contained in the regulations”–was unreasonable. The Ninth Circuit reversed, interpreting the statute to require compliance with both Section 404 and the effluent limitations and refusing to defer to the joint interpretation of “fill material” adopted by the Corps and EPA, despite agreeing with the district court that the agencies’ interpretation was facially consistent with their regulations.

The Ninth Circuit’s decision had threatened to restrict severely the ability of the nation’s mining industry to use the Section 404 permit program: It imperiled existing mines developed over years of planning and at great cost, and it threatened to impose significant costs on future mining activities. Mining inherently produces excess materials, including rock, dirt, and other tailings. Because valuable minerals are often located in mountainous areas where the only stable locations for these excess materials are, as a matter of simple topology, places that also tend to form streams, these tailings must often be disposed of in waters governed by the Clean Water Act. Additionally, alternative methods of disposal, such as those considered by Coeur for its Kensington gold mine, may often lead to greater loss of wetlands, to aesthetic harms (such as the creation of unsightly tailings stacks), and other environmental costs. Under the Ninth Circuit’s interpretation of the Act, the effluent limitations that EPA has promulgated for numerous types of mining operations (including as open-pit operations, underground operations, placer deposits, froth-flotation processes, dump processes, heap processes, in-situ leach processes, vat-leach processes, and gravity separation methods) applied, effectively precluding discharges that have in the past been permitted by the Corps and EPA as discharges of fill material.

In spite of an opposition brief by the government, in which the government agreed that the Ninth Circuit erred but argued that the issue did not merit review, the Supreme Court granted certiorari to resolve whether the Ninth Circuit’s reallocation of the Corps’ and EPA’s authority under the Clean Water Act is consistent with the Act. Gibson Dunn attorneys Theodore B. Olson, Matthew D. McGill, and Aaron D. Lindstrom prepared the successful petition for a writ of certiorari on behalf of Coeur Alaska, Inc. and its parent company Coeur d’Alene Mines Corporation. Argument will be held during the Supreme Court’s next term, and a decision is expected in the case by June 2009. Gibson Dunn will transmit an analysis of the opinion shortly after it is issued.