The Nickel Report

Recently, the states and federal agencies have clashed in a number of environmental rulemakings and subsequent litigation over those rules. These disagreements have raised a host of important legal and policy questions, including the proper balance of power between the states and the federal government and the communication process and overall relationship between the states and federal agencies. Recently filed litigation challenging the Stream Protection Rule, 81 Fed. Reg. 93,066 (Dec. 20, 2016), would prompt judicial review of many of these issues. But the likelihood of administrative or congressional action on this rule (through the Congressional Review Act) could preclude judicial input on these questions for now. If the rule is ultimately withdrawn or overturned, the manner in which it is may also present important federalism questions. Further complicating this process are two motions to intervene in two of these cases, filed by several environmental groups to defend the final Stream Protection Rule from being vacated or weakened.

On January 17, 2017, a coalition of thirteen states (OH, WV, AL, AK, AR, CO, IN, MO, MT, TX, UT, WY, KY)  filed a complaint against the Department of Interior, Office of Surface Mining Reclamation and Enforcement (OSM), challenging the Stream Protection Rule. This rule revises OSM’s regulations implementing the Surface Mining Control and Reclamation Act of 1977 (SMCRA). Throughout the rulemaking process, this rule has been subject to controversy concerning both its content and OSM’s procedure for developing it and communicating with states. Both Congress and the new presidential administration have identified this rule as one they will seek to overturn.

To date, the state coalition complaint is the third one challenging the Stream Protection Rule. The other challenges were filed in December separately by North Dakota and Murray Energy Corporation. Though the focus of each complaint is slightly different, each of them brings claims for violations of SMCRA, the Administrative Procedure Act (APA), and the US Constitution. Many of these arguments present direct or indirect federalism issues. Like many environmental statutes, SMCRA uses a cooperative federalism structure where the federal government establishes minimum standards and states are thereafter primarily in charge of implementing and enforcing them. Hodel v. Virginia Surface Min. & Reclamation Ass’n, Inc., 452 U.S. 264, 289 (1981). SMCRA particularly emphasizes the authority of states; once a state program that regulates surface coal mining and reclamation operations has been federally approved, the state has primary jurisdiction (primacy) for enforcing SMCRA within its borders, using the federally approved state laws and regulations.

The state coalition complaint presents an additional argument focused on the role of states in OSM’s process for developing and finalizing the Stream Protection Rule. The thirteen states, all of which are primacy states, allege that OSM did not communicate enough with them. Specifically, the states allege that OSM violated (1) the National Environmental Policy Act because it failed to meaningfully engage with cooperating state agencies, and (2) the Consolidated Appropriations Act of 2016 because it failed to provide all relevant documents to the states, conduct more meetings with the states, and reengage with the states before finalizing the rule.

Although OSM responded to comments from states on these matters when it issued the final rule, 81 Fed. Reg. at 93,071, it may not respond to these charges in litigation because the rule may be withdrawn or overturned by Congress or the new administration. This litigation would be stayed, settled, or mooted by these actions. The way in which the Stream Protection Rule is withdrawn or overturned will have federalism implications. If the rule is remanded back to the agency (instead of overturned by Congress), the substantive outcome may produce the federalism realignment the plaintiffs have sought. An interesting question may be whether remand to OSM also produces the additional communication and inclusion in the decision making process that the coalition states seek, both on this and future rulemakings.

OSM’s response to these cases may also be influenced by efforts by several environmental groups to intervene in defense of the Stream Protection Rule. On January 18, 2017, several environmental groups filed motions to intervene to prevent vacatur or weakening of the standards in the Stream Protection Rule based on the claims brought by North Dakota and Murray Energy. If OSM seeks to settle these cases, the timing of settlement discussions with the plaintiffs and/or the terms of the settlement may take into account these intervention motions and the likely opposition by the environmental groups to changing the final Stream Protection Rule.