Kentuckians for the Commonwealth v. United States Army Corps of Engineers (746 F.3d 698, 2014)

OPINION

ROGERS, Circuit Judge.

More than six years after the Commonwealth of Kentucky authorized a surface mining operation in Perry County, this appeal raises the issue of the proper scope of environmental analysis a federal agency must use in issuing a permit related to a small but necessary part of the operation. The Surface Mining Control and Reclamation Act grants Kentucky “exclusive jurisdiction” over the regulation of surface mining within the state, subject to minimum federal standards. In order to conduct surface mining in Kentucky, a mine operator must obtain a permit for the overall operation from Kentucky’s Division of Mine Permits, as well as subsidiary permits related to water and stream quality, as required by the Clean Water Act. One of these permits is a § 404 permit, which is issued by the U.S. Army Corps of Engineers and is required for the discharge of dredged or fill material into waters of the United States. After obtaining a permit from the Division of Mine Permits, inter-venor Leeco, Inc. applied for and received a § 404 permit from the Corps. The permit authorizes Leeco to “mine through” and fill certain surface stream beds, which are already in a degraded state, and requires Leeco to offset the limited environmental effect of the filling by improving other streams in the watershed.

The plaintiffs challenge the Corps’s issuance of the § 404 permit, arguing that the National Environmental Policy Act (“NEPA”) requires the Corps to have considered in its environmental assessment the public health impacts related to surface mining in general, and that the Corps violated the Clean Water Act by using a flawed analysis of the associated compensatory mitigation plan. In a comprehensive and thoughtful opinion, the district court rejected the plaintiffs’ arguments. This appeal followed. Because the Corps did not abuse its discretion in limiting the scope of its environmental analysis only to health effects closely related to the discharge of dredged or fill material into jurisdictional waters, the Corps did not violate NEPA. And because the Corps’s acceptance of Leeco’s compensatory mitigation plan was not an arbitrary and capricious exercise of its specialized expertise, the Corps did not violate its requirements under the Clean Water Act. Accordingly, we must uphold the Corps’s decision to issue the § 404 permit.

We of course decide only the issues before us — whether the permit at issue in this case complies with the Clean Water Act and the National Environmental Policy Act. Our decision takes no position on the public policy questions of whether surface mining is in the larger public interest, or whether mountaintop removal should be allowed by the Commonwealth of Kentucky.

Congress passed the Surface Mining Control and Reclamation Act of 1977 (“SMCRA”) in order to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” 30 U.S.C. § 1202(a). The Act set up a system of “cooperative federalism,” in which state governments could opt in to regulating coal surface mining in their states so long as they establish agencies to enact and administer their own regulatory programs consistent with federal minimum standards and subject to federal approval. See Hodel v. Va. Surface Mining & Reclamation Ass’n, 452 U.S. 264, 289, 101 S.Ct. 2352, 69 L.Ed.2d 1 (1981). Under the Act, a state that administers a federally approved program “assume[s] exclusive jurisdiction over the regulation of surface coal mining and reclamation operations” on non-federal lands, 30 U.S.C. § 1253(a), with limited federal oversight to ensure compliance with federal standards, id. § 1271. Kentucky’s Department for Natural Resources has assumed legal responsibility for implementation of SMCRA through its Division of Mine Permits. See Ky.Rev.Stat. §§ 350.028, 465(2). This program has been approved by the U.S. Department of the Interior since 1982. 30 C.F.R. § 917.10. Thus, any surface mining operation in the Commonwealth of Kentucky must be conducted with a permit from the Division of Mine Permits. See 30 U.S.C. § 1256(a).

Although a SMCRA permit authorizes all of the activities related to a surface mining operation, it alone may not be sufficient to allow a mine operator to conduct surface mining operations. See Ohio Valley Envtl. Coal. v. Aracoma Coal Co., 556 F.3d 177, 190-91 (4th Cir.2009). Other permits may be required to authorize portions of the operation, if those specific activities are regulated by an independent regulatory program. For example, if a surface mining operation will affect the navigable waters of the United States, the Clean Water Act, 33 U.S.C. § 1251 et seq., which aims to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters” by eliminating “the discharge of pollutants into the navigable waters.” 33 U.S.C. § 1251(a)(1), requires a surface mine operator to obtain various other permits related to the quality of water and wetlands.

For the typical surface mining operation, three different Clean Water Act permits are required. First, a mine operator must obtain a § 401 permit from the proper permitting agency to ensure that “any discharge into the navigable waters” complies with regulations designed to limit the discharge of pollutants into navigable waters and to ensure the maintenance of federal water quality standards. Id. § 1341. Second, a mine operator must obtain a § 402 permit for “the discharge of any pollutant, or combination of pollutants.” Id. § 1342. Finally, and most relevant to the present litigation, a mine operator must also obtain a § 404 permit “for the discharge of dredged or fill material into the navigable waters at specified disposal sites.” Id. § 1344. This final permit must be obtained from the U.S. Army Corps of Engineers. See id. § 1344(d); 33 C.F.R. § 320.2(f).

In conducting its review for a § 404 permit, the Corps is required to comply with guidelines promulgated by the Environmental Protection Agency (“EPA”), which are called the § 404(b)(1) Guidelines. 33 U.S.C. § 1344(b)(1); see also 33 C.F.R. § 320.2(f); 40 C.F.R. pt. 230. The review includes the consideration of the health and welfare of those that would be affected by the discharge into jurisdictional waters. For example, under the regulations, the Corps must not issue a permit if the discharge of dredged or fill material would “cause or contribute to significant degradation of the waters of the United States,” which may be constituted by certain effects considered individually and collectively, including “[significantly adverse effects of the discharge of pollutants on human health or welfare” and “[significantly adverse effects of discharge of pollutants on recreational, aesthetic, and economic values.” 40 C.F.R. § 230.10(c), (c)(1), (c)(4). The Corps additionally imposes some general policies that are to be considered in the evaluation of all permit applications, and not only § 404 permits. Under these policies, a decision must include “an evaluation of the probable impacts, including cumulative impacts, of the proposed activity and its intended use on the public interest,” and “reflect the national concern for both protection and utilization of important resources.” 33 C.F.R. § 320.4(a).

In addition to its responsibilities under the Clean Water Act, the Corps must also comply with the requirements of NEPA, 42 U.S.C. § 4321 et seq., which requires federal agencies to “take a ‘hard look’ at the potential environmental consequences of their actions.” Aracoma Coal, 556 F.3d at 191 (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350,109 S.Ct. 1835, 104 L.Ed.2d 351 (1989)). NEPA requires federal agencies to prepare a detailed statement, called an environmental impact statement, for every “major Federal action[] significantly affecting the quality of the human environment.” 42 U.S.C. § 4332(2)(C); see also 40 C.F.R. § 1502.3. When it is not clear whether an environmental impact statement is required, the agency will prepare an environmental assessment, “a concise public document ... that serves to ... [bjriefly provide sufficient evidence and analysis for determining whether to prepare an environmental impact statement or a finding of no significant impact.” 40 C.F.R. §§ 1501.3, 1501.4(b), 1508.9; see also Save Our Cumberland Mountains v. Kempthorne, 453 F.3d 334, 339 (6th Cir. 2006). If an environmental impact statement is not required, the agency must “[p]repare a finding of no significant impact,” 40 C.F.R. § 1501.4(e), that “briefly presents] the reasons why an action ... will not have a significant effect on the human environment and for which an environmental impact statement therefore will not be prepared,” id. § 1508.13. In practice, the environmental assessment generally serves as the finding of no significant impact when an environmental impact statement is not required.

The present action concerns a proposed surface coal mining operation in Perry County, Kentucky, by the intervenor Lee-co, Inc. The proposed mining area and the stream beds within it are already environmentally degraded, having been heavily impacted in the past century by previous mining, logging, natural gas exploration, and agricultural activities. The Kentucky Department of Mine Permits authorized the mining operation, and then in early 2007 Leeco submitted an application to the Department of the Army for a permit to authorize the discharge of fill material into stream beds on the project site, as required by § 404 of the Clean Water Act. The Corps issued a public notice for Lee-co’s application, with a 30-day comment period. This original proposal sought to construct six hollow fills and six sediment control ponds and would have involved discharges into 22,761 linear feet of stream. In the following years, Leeco supplemented and revised its application.

In June 2009 the Department of the Army, the EPA, and the Department of the Interior instituted an interagency action plan intended to “significantly reduce the harmful environmental consequences of Appalachian surface coal mining operations, while ensuring that future mining remains consistent with federal law.” Implementing the Interagency Action Plan on Appalachian Surface Coal Mining (June 11, 2009), available at http://www.osmre.gov/ resources/mou/ASCM061109.pdf. In response to this plan, the EPA conducted a review of Leeco’s pending § 404 permit application. The EPA’s preliminary assessment concluded that there were “significant concerns that the project, as proposed, does not comply with the [EPA’s] 404(b)(1) Guidelines.” The EPA expressed concerns over water quality and mitigation attempts, as well as concern that “the proposed project may have significant human health impacts on the surrounding communities, all of which are low-income communities.” In a later letter, the EPA outlined extensive strategies on how to improve the plan.

In response to these concerns from the EPA, Leeco submitted a significantly revised permit application on July 19, 2011. The new application consolidated the fill plan to only one large hollow fill and one sediment control pond. Id. The new plan would impact only 18,268 linear feet of streams, a decrease of 4,593 linear feet. Id. This later design would all together impact 11,607 linear feet of ephemeral streams (that flow only during periods of heavy precipitation), 5,073 linear feet of intermittent streams (that flow continuously only at certain times of the year, usually because the source, such as melting snow, is seasonal), and 1,588 linear feet of perennial streams (that flow year round). The revised application included a compensatory mitigation plan that would require Lee-co to replace 8,376 linear feet of stream in the same watershed area, to compensate for the loss of intermittent and perennial streams. In addition, Leeco agreed to pay the Kentucky Department of Fish and Wildlife Resources $752,047.50 in lieu of mitigation for the impacts on ephemeral streams.

The Corps issued a new public notice on August 5, 2011, with a comment period that lasted through August 19, 2011. During this comment period, the Sierra Club submitted comments objecting to the proposal, and attached studies purporting to demonstrate general health concerns related to surface coal mining. On April 3, 2012, the EPA informed the Corps that it had no further concerns regarding the proposed project, indicating the EPA’s approval of the new plan. On May 25, 2012, the Corps completed its review and decision to issue the permit, along with a detailed document discussing its decision. In its decision, the Corps found that “issuance or denial of the requested permit would not constitute a major federal action that would significantly affect the quality of the human environment,” and that that determination “constitutes a Finding of No Significant Impact.” The Corps finally granted Leeco the § 404 permit on July 26, 2012.

On October 17, 2012, the plaintiffs Kentuckians for the Commonwealth, a grassroots organization devoted to improving the quality of life for the citizens of Kentucky, and the Sierra Club, a national environmental nonprofit organization, filed a complaint against the Corps in the Western District of Kentucky, challenging the issuance of the permit and alleging that it was issued in violation of the Clean Water Act, NEPA, and the Administrative Procedure Act, 5 U.S.C. § 500 et seq. Count One alleged that the Corps had violated NEPA by failing to issue an environmental impact statement, Count Two alleged that the Corps had failed to consider adverse effects on human health and welfare as required by the Clean Water Act § 404(b)(1) Guidelines, Count Three alleged that the Corps had violated its own regulations in failing to properly consider the public interest, and Count Four alleged that the Corps violated the Clean Water Act § 404(b)(1) Guidelines by issuing a permit that will cause or contribute to violations of water quality standards and significant degradation of waters of the United States.

After motions and cross-motions for partial summary judgment, the district court, in a thoroughly reasoned opinion, granted summary judgment in favor of the Corps on all counts, dismissing the suit in its entirety on August 23, 2013. Kentuckians for the Commw. v. U.S. Army Corps of Eng’rs, 963 F.Supp.2d 670, 692-93, No. 3:12-CV-00682, 2013 WL 4516774, at *21 (W.D.Ky. Aug. 23, 2013). The court first held that the plaintiffs had standing because their members alleged an injury in the form of possible detrimental effects to their health, livelihood, and outdoor recreational pursuits. Id. at 679-80, 2013 WL 4516774 at *8. Regarding the NEPA claim, the court held that the Corps properly limited the scope of review to the filling of jurisdictional waters, because “under SMCRA, it is the [Kentucky Division of Mine Permits], and not the Corps, that has control and responsibility over the Stacy Branch mine site as a whole,” and the Corps was otherwise entitled to deference on the scope of review. Id. at 681-83, 2013 WL 4516774 at *10. The court also held that the plaintiffs’ comments during the second comment period that cited human health studies did not constitute “significant new information” requiring a supplemental environmental assessment. Id. at 68