Western Nebraska Resources Council v. U.S. E.P.A., 90-2158

Decision Date03 September 1991
Docket NumberNo. 90-2158,90-2158
Citation943 F.2d 867
Parties, 22 Envtl. L. Rep. 20,062 WESTERN NEBRASKA RESOURCES COUNCIL, Petitioner, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent, Ferret Exploration Company of Nebraska, Intervenor, State of Nebraska, Department of Environmental Control, Intervenor.
CourtU.S. Court of Appeals — Eighth Circuit

Andrew B. Reid, Chadron, Neb., for appellant.

Jon M. Lipshultz, Washington, D.C., argued (Richard B. Stewart, Jon M. Lipshultz and Randolph L. Hill, Washington, D.C., Patricia G. Miller, Kansas City, Kan., on the brief), for appellee.

Before McMILLIAN, ARNOLD and LOKEN, Circuit Judges.

LOKEN, Circuit Judge.

In 1983, the State of Nebraska exempted 3,000 acres of the Basal Chadron aquifer from the state's Underground Injection Control (UIC) program and petitioned the U.S. Environmental Protection Agency to approve that exemption under the Safe Drinking Water Act (SDWA), 42 U.S.C. §§ 300f et seq. The exemption was sought to permit injection-process mining of uranium ore deposits located in the aquifer. EPA approved an exemption for a 6.7 acre research and development pilot project, but held its action on the remaining acres "in abeyance." 50 Fed.Reg. 5253 (Feb. 7, 1985). Petitioner Western Nebraska Resources Council (WNRC) petitioned this court for judicial review of that limited approval order under 42 U.S.C. § 300j-7(a). We affirmed. Western Neb. Resources Council v. E.P.A., 793 F.2d 194 (8th Cir.1986) ("WNRC I ").

Following completion of the pilot project, Nebraska renewed its request for approval of the entire 3,000 acre exemption. EPA received additional public comments, held an additional informal hearing, and approved the request. 55 Fed.Reg. 21,191 (May 23, 1990). WNRC again appeals, alleging that both substantive and procedural error infected the agency's decision. We affirm.

I.

"World class" uranium ore deposits have recently been discovered in the northwest Nebraska panhandle. An estimated 25.5 million pounds of uranium reside in the ore beneath the 3,000 acres here at issue. Ferret Exploration Company of Nebraska, Inc. (FEN), proposes to inject a leaching solution through injection wells into the ore zone, pump the dissolved uranium to the surface, extract the uranium, and then treat and reinject the water. At the conclusion of mining operations, FEN will restore the site, which includes restoring the groundwater to at least its prior quality. Assuming required approvals are granted, FEN will operate pursuant to a license issued by the U.S. Nuclear Regulatory Commission (NRC) and a permit issued by the Nebraska Department of Environmental Control (NDEC).

The SDWA, enacted in 1974 to assure safe drinking water supplies, includes provisions regulating underground injections that endanger drinking water sources. Under this portion of the statute, states may assume primary enforcement responsibility by establishing UIC programs that adopt and implement minimum federal requirements contained in EPA's SDWA regulations. See 42 U.S.C. §§ 300h, 300h-1. Nebraska's UIC program has been approved by EPA pursuant to these provisions.

The uranium ore deposits in question are located in the "basal," or lower portion of the Chadron aquifer. Because the aquifer is an underground source of drinking water as defined in the EPA regulations, FEN may not conduct the proposed injection mining until Nebraska has exempted this portion of the aquifer from its UIC program and EPA has approved that exemption as a revision to the state's program. See 40 C.F.R. §§ 144.7(b)(3) and 145.32, quoted in WNRC I, 793 F.2d at 195-196.

Nebraska exempted the entire 3,000 acres in its initial 1983 decision, but EPA only approved a 6.7 acre exemption for the pilot project in the order we affirmed in WNRC I. Therefore, after FEN completed the pilot project, Nebraska returned to EPA in 1988 for approval of the entire exemption. In the order under review, EPA granted that approval, concluding that this portion of the Chadron aquifer qualifies for exemption because (i) it "does not currently serve as a source of drinking water," 40 C.F.R. § 146.4(a), and (ii) it "cannot now and will not in the future serve as a source of drinking water because [FEN has] demonstrated [that the aquifer contains] minerals ... expected to be commercially producible," 40 C.F.R. § 146.4(b)(1). On appeal, WNRC argues that EPA's exemption regulations are invalid, that this exemption approval order is arbitrary and capricious, and that various procedural errors require reversal. FEN and NDEC have intervened in support of EPA's exemption approval.

II.

WNRC first argues that the exemption approval is invalid because EPA lacks statutory authority to permit any contamination of underground drinking water sources. As WNRC acknowledges, this is an attack on the validity of EPA's exemption regulations, both on their face and as applied in this case. EPA responds that this attack is barred by the doctrines of res judicata and collateral estoppel because, in WNRC I, we held that WNRC's similar challenge to the regulations was time-barred under 42 U.S.C. § 300j-7(a). See 793 F.2d at 199.

We agree that WNRC I forecloses any direct challenge to the regulations under § 300j-7(a)(1), but it does not foreclose other types of challenge. Section 300j-7(a) expressly permits review of EPA's regulations, after expiration of the normal review period, "if the petition is based solely on grounds arising after the expiration of such period." 1 Moreover, the parties agree that EPA's exemption approval is an "action" subject to judicial review under § 300j-7(a)(2). Since it is therefore clear that the statute permits WNRC to attack the regulations as applied in this case, the question becomes whether WNRC may attack the validity of the regulations as well. That question is an administrative law battleground--administrative agencies in general stoutly resist those cases holding that, when an agency applies a previously adopted rule to a particular case, statutory time limits on judicial review of the rule-making do not foreclose the reviewing court from examining the statutory authority for the rule, as well as the soundness of its application to the specific situation before the court. See Texas v. United States, 749 F.2d 1144, 1146 (5th Cir.), cert. denied, 472 U.S. 1032, 105 S.Ct. 3513, 87 L.Ed.2d 642 (1985); Functional Music, Inc. v. FCC, 274 F.2d 543, 546 (D.C.Cir.1958), cert. denied, 361 U.S. 813, 80 S.Ct. 50, 4 L.Ed.2d 60 (1959).

We conclude that we need not resolve this question here because WNRC's validity argument is, in any event, patently wrong. WNRC argues that EPA, having broadly defined underground sources of drinking water in its regulations, then has no authority to permit by exemption any potential contamination of any such source. However, the statute does not expressly preclude the exemption of an aquifer that is not currently used for drinking water purposes. The key provisions of the statute speak in terms of regulation, not absolute prohibition. See 42 U.S.C. §§ 300h(b), 300h(d)(2). The principal legislative history explains that the statute was primarily aimed at controlling underground injections of waste; although Congress also intended that injection mining activities be covered, it contemplated regulation, not prohibition, because of the importance of avoiding needless interference with energy production and other commercial uses. See H.R.Rep. No. 93-1185, 93rd Cong., 2d Sess., reprinted in 4 1974 U.S.Code, Cong. & Admin.News 6454, 6480-6484.

The regulatory approach adopted here by EPA--a broad definition of covered underground waters coupled with a discretionary exemption mechanism--is a common method by which agencies preserve their discretion to regulate equitably on a case-by-case basis. Such exemption mechanisms "are inherent in the administrative process, and their unavailability under a statutory scheme should not be presumed, save in the face of the most unambiguous demonstration of congressional intent to foreclose them." Alabama Power Co. v. Costle, 636 F.2d 323, 357 (D.C.Cir.1979). We find no such foreclosure in the SDWA. Thus, EPA's exemption regulations are plainly a permissible interpretation of the statute to which we must defer. See Chemical Mfrs. Ass'n v. N.R.D.C., 470 U.S. 116, 125, 105 S.Ct. 1102, 1107, 84 L.Ed.2d 90 (1985); Chevron U.S.A. v. N.R.D.C., 467 U.S. 837, 865, 104 S.Ct. 2778, 2793, 81 L.Ed.2d 694 (1984).

III.

WNRC argues that, even if the exemption regulations are valid, EPA's decision exempting the remaining 2993.3 acres of the Chadron aquifer from SDWA protection was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Under this standard of review, we may not substitute our views for those of the agency, but we must determine whether

the agency [has] articulate[d] a satisfactory explanation for its action including a "rational connection between the facts found and the choice made." In reviewing that explanation, we must "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment."

WNRC I, 793 F.2d at 200 (citation omitted).

WNRC sidesteps the crucial question, whether the record supports EPA's conclusion that this exemption satisfies the criteria in § 146.4 of the regulations. Instead, WNRC's principal complaint is that EPA "gerrymandered" the boundaries of the 3,000 acres so as to satisfy the regulations. On the one hand, it argues, the area was carefully drawn so that no present wells using the Chadron aquifer are included, which permitted the finding that the exempted portion "does not currently serve as a source of drinking water," 40 C.F.R. § 146.4(a). On the other hand, WNRC accuses EPA of arbitrarily giving FEN a "buffer zone" by including in the 3,000 acres a sizeable area...

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